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Full text of "North Carolina Register v.13 no. 8 (10/15/1998)"

NORTH CAROLINA 

REGISTER 



VOLUME 13 • ISSUE 8 • Pages 621 - 752 



October 15, 1998 



IN THIS ISSUE 

Administration 

Certified Public Accountant Examiners 

Commerce 

Environment and Natural Resources 

Health and Human Services 

Insurance 

Labor 

Medical Board 

Nursing. Board of 

Revenue 

Transportation 

Rules Review Commission 

Contested Case Decisions 



PUBLISHED BY 

The Office of Administrative Hearings 
Rules Division 
PO Drawer 27447 
Raleigh, NC 27611-7447 
Telephone (919) 733-2678 
Fax (919) 733-3462 



RECEIVED 
OCT 2 1 1998 

KATHRINE R. EVERETT 
LAW LIBRARY 



This publication is printed on permanent, acid-free paper in compliance with G.S. 125-11. 13 



For those persons that have questions or concerns regarding the Administrative Procedure Act or any of its 
components, consult with the agencies below. The bolded headings are typical issues which the givev, 
agency can address, but are not inclusive. 



Rule Notices, Filings, Register, Deadlines, Copies of Proposed Rules, etc. 

Office of Administrative Hearings 

Rules Division 

Capehart-Croci^er House (919) 733-2678 

424 North Blount Street (919) 733-3462 FAX 

Raleigh, North Carolina 27601-2817 



contact: Molly Masich, Director APA Services 
Ruby Creech, Publications Coordinator 



mmasich@oah.state.nc.us 
rcreech@oah .state.nc. us 



Fiscal Notes & Economic Analysis 

Office of State Budget and Management 

1 1 6 West Jones Street 

Raleigh, North Carolina 27603-8005 

contact: Mark Sisak, Economist ill 



(919)733-7061 
(919) 733-0640 FAX 

msisak(rt)osbm.state.nc.us 



Rule Review and Legal Issues 

Rules Review Commission 
1307 Glenwood Ave., Suite 159 
Raleigh, North Carolina 27605 

contact: Joe DeLuca Jr., Staff Director Counsel 
Bobby Br>'an, Staff Attorney 



(919)733-2721 
(919) 733-9415 FAX 



Legislative Process Concerning Rule-making 

Joint Legislative Administrative Procedure Oversight Committee 

545 Legislative Office Building 

300 North Salisbury Street (919) 733-2578 

Raleigh, North Carolina 27611 (919) 715-5460 FAX 



contact: Mary Shuping, Staff Liaison 



marys@ms.ncga.state.nc.us 



County and Municipality^ Government Questions or Notification 

NC Association of Count>' Commissioners 

2 1 5 North Dawson Street (9 1 9) 7 1 5-2893 

Raleigh, North Carolina 27603 

contact: Jim Blackburn or Rebecca Troutman 



NC League of Municipalities 
2 1 5 North Dawson Street 
Raleigh, North Carolina 27603 

contact: Paula Thomas 



(919)715-4000 



This publication is printed on permanent, acid-free paper in compliance with G.S. 125- 1 1. 13 



NORTH CAROLINA 
REGISTER 



I 




> 



Volume 13, Issue 8 
Pages 621 - 752 



October 15, 1998 



This issue contains documents officially filed 
through September 24. 1998. 



Office of Administrative Hearings 

Rules Division 

424 North Blount Street (27601 ) 

PO Drawer 27447 

Raleigh. NC 2761 1-7447 

(919)733-2678 

FAX (919) 733-3462 



Julian Mann III. Director 

Camille Winston. Deputy Director 

Molly Masich, Director of APA Services 

Ruby Creech. Publications Coordinator 

Jean Shirley. Editorial Assistant 

Linda Dupree. Editorial Assistant 

Jessica Flowers. Editorial Assistant 



IN THIS ISSUE 



I. RULE-MAKING AGENDA 

Environment and Natural Resources 

Environmental Management 621 - 624 

Health Services. Commission for 621 - 624 

II. RULE-MAKING PROCEEDINGS 
Environment and Natural Resources 

Wildlife Resources Commission 625 - 626 

Transportation 
Highways, Division of 626 

III. PROPOSED RULES 
Administration 

Environmental Policy Act 642 - 645 

Indian Affairs . . . .' 640-642 

Purchase and Contract 627 - 640 

State Building Commission 645 - 647 

State Emplovees Combined Campaign 647 - 652 

Commerce 
Finance Center 652 - 668 

En\ ironment and Natural Resources 
Soil and Water Conservation Commission 688 - 690 

Health and Human Ser\ ices 
Medical Assistance 668 - 673 

Insurance 
Life and Health Division 673 - 676 

Labor 

Boiler and Pressure Vessel 685 - 686 

Retaliatory Employment Discrimination 686 - 688 

Wage and Hour 676-685 

Licensing Boards 

Certified Public Accountant Examiners 696 - 709 

Medical Board 709-725 

Nursing. Board of 725 - 732 

Revenue 

Individual Income Tax Division 694 - 695 

License and Excise Tax Division 690 - 694 

Motor Fuels Tax Division 695 - 696 

Sales and Use Tax 695 

IV. TEMPORARY RULES 
Environment and Natural Resources 

Marine Fisheries Commission 739 - 740 

Health and Human Services 

Medical Assistance 733 - 739 

V. RULES REVIEW COMMISSION 741-746 

VI. CONTESTED CASE DECISIONS 

Index to ALJ Decisions 747 - 752 

VII. CUMULATIVE INDEX 1-73 



\orili Carolina Kegisler is puhlishtd semi-monthh lor $1V5 per \ear b\ the ortlcc nl \clniinislrati\e Hearings. 424 North Blount Street. Raleigh. NL 
27601 (ISSN L>2(I(IW)4) to mail at Penodieals Rates is paid at Raleigh. NC POSTMASTER: Send Address changes to the Xorili Carolina Regisier. 
P(J Drawer 27447. Raleidi. NC 2761 1-7447 



NORTH CAROLINA ADMINISTRATIVE CODE CLASSIFICATION SYSTEM 



The Xorih Carolina Administrative Code (NCAC) lias four major subdivisions of rules. Two of these, titles and chapters, 
arc mandatory. The major subdivision of the ,\C.4C is the title. Each major department in the North Carolina executive 
branch of government has been assigned a title number. Titles are jiirther broken down into chapters which shall be 
numerical in order. The other nvo. subchapters and sections are optional subdivisions to be used by agencies when 
appropriate. 



TITLE/MAJOR DIVISIONS OF THE NORTH CAROLINA ADMINISTRATIVE CODE 



TITLE 



DEPARTMENT 



LICENSING BOARDS 



CHAPTER 



1 


Adiiiinislralioii 


Acupuncture 


1 


-) 


Agriculture 


Architecture 


1 


3 


Auditor 


Athletic Trainer Examiners 


3 


4 


Commerce 


Auctioneers 


4 


5 


Correction 


Barber Examiners 


6 


6 


Council of State 


Certified Public Accountant Examiners 


8 


7 


Cultural Resources 


Chiropractic Examiners 


10 


8 


Elections 


Employee Assistance Professionals 


11 


9 


(jo\ernor 


General Contractors 


12 


U) 


Health and Human Ser\ices 


Cosmetic Art Examiners 


14 


11 


Insurance 


Dental Examiners 


16 


12 


Justice 


Dietetics/Nutrition 


17 


13 


Labor 


Electrical Contractors 


18 


14A 


Crime Control & Public Satet\ 


Electrol>sis 


19 


15A 


En\ ironment and Natural 


Foresters 


20 




Resources 


Geologists 


21 


16 


Public Education 


Hearing Aid Dealers and Fitters 


-)-) 


17 


Re\enue 


Landscape Architects 


26 


18 


Secretar\ of State 


Landscape Contractors 


28 


19A 


Transportation 


Marital and Famil_\ Therapy 


31 


20 


Treasurer 


Medical Examiners 


32 


*21 


Occupational Licensing Boards 


MidwifePi Joint Committee 


33 


")"> 


Administrative Procedures 


Mortuary Science 


34 


23 


CommunitN Colleges 


Nursing 


36 


24 


Independent Agencies 


Nursing Home Administrators 


37 


25 


State Personnel 


Occupational Therapists 


38 


26 


Administrati\e Hearings 


Opticians 


40 


27 


NC State Bar 


Optometp. 


42 






Osteopathic Examination & Reg. (Repealed) 


44 






Pastoral Counselors. Fee-Based Practicing 


45 






Pharmacx 


46 






Phvsical Therap\ Examiners 


48 






Plumbing. Heating & Fire Sprinkler Contractors 


50 






Podiatry Examiners 


52 






Professional Counselors 


53 






Psychology Board 


54 






Professional Engineers & Land Sur\ e\ors 


56 






Real Estate Appraisal Board 


57 






Real Estate Commission 


58 






Refrigeration Examiners 


60 






Sanitarian Examiners 


62 






Social Work Certification 


63 






Soil Scientists 


69 






Speech & Language Pathologists & Audiologists 


64 






Substance Abuse Professionals 


68 






Therapeutic Recreation Certification 


65 






Veterinar\ Medical Board 


66 



Note: Title 2 1 contains the chapters of the various occupational licensing boards. 



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I 



RULE-MAKING AGENDA 



An agency may choose to publish a rule-making agenda which serves as a notice of rule-making proceedings if the agenda 
includes the information required in a notice of rule-making proceedings. The agency must accept comments on the agenda for 
a! least 60 days from the publication date. Statutory reference: G.S. 1 50B-2I .2. 



TITLE 15A - DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES 

This agenda will serve as the notice of rule-makitig proceedings for the following rule-making bodies from October 15. 1998 through 

December 15. 1998: 

Environmental Management Commission - to rules codified in 15.4 NCAC 2B. 2D, 2H. & 2Q; 

Commission for Health Sen-ices - to rules codified in ISA NCAC 18A. 



AIR QUALITY 

APA # 
E2681 
E2682 
E2683 
E2684 
E2685 



SUBJECT 

Pennit Content 

New Source Performance Standards 

Activities Exempt from Permit Requirements 

Activities Exempted from Pemiit Requirements 

Concrete Batcii Plants 



RULE CITATION # 
ISA NCAC 2Q .0508 
ISA NCAC 2D .0524 

ISA NCAC 20 .01 02 
ISA NCAC 20 .0102 
ISA NCAC 2D .0541 (New Rule) 



WATER QUALITY 
APA# SUBJECT 



E2697 



1997-1998 Triennial Surface Water Quality 
Standards Review 



RULE CITATION P 

ISA NCAC 2B .0100 and .0200 



WATER QUALITY LABORATORY SERVICES 

APA # SUBJECT 

E2655 Laboratorv Certification 



RULE CITATION # 
ISA NCAC 2H .0800 



APA #; E2655 

SUBJECT: Lrboratorv' Certification 

RULE CITATION #: I'SA NCAC 2H .0800 

STATUTORY AUTHORITY: G.S. 143-2 1 S.3(a)( 1 ); 143-215.3(aK10) 

DIVISION SECTION: WATER QUALITY/LABORATORY SERVICES 

DIVISION CONTACT: James W. Meyer 

DIVISION CONTACT TEL#: (919)733-3908 

DATE INITIATED: 7 '23/98 

DURATION OF RULE: Permanent 4/1/99 

TYPE OF RULE: 

STAGE OF DEVELOPMENT: Draft Rule Stage 

GOV LEVELS AFFECTED: Local 

REASON FOR ACTION: 

The present fee collection schedule is not adequate to support the program. To date, salaries have risen 24% for employees: travel 

expenses have risen 25-30° o; operation costs for materials, supplies, equipment maintenance, etc. have risen 25-30° o. The abilit>' 

to keep the program functional with these cost increases under the old fee schedule has become impossible, which has prompted 

the proposed action. 

SCOPE -NATURE/SUMMARY: 

The purpose of these Rules is to set out certification criteria for laboratory facilities performing any tests, analyses, measurements. 

or monitoring required under Article 21 of G.S. 143 or anv rules adopted thereunder, and to establish fees for certification. 

APA #:E2681 

SUBJECT: Permit Content 

RULE CITATION #: ISA NCAC 2Q .0508 

STATUTORY AUTHORITY: G.S. I43-2I5.3(a)(r); 143-215.65: 143-215.66: 143-215. 107(a)(10): 143-215.108 

DIVISION/SECTION: AIR QUALITY 

DIVISION CONTACT: Thorn Allen 

DIVISION CONTACT TEL#: (919)733-1489 



13:8 



NORTH CAROLINA REGISTER 



October 15. 1998 



621 



R ULE-MA KING A GENOA 



DATE INITIATED: 8 12 Q8 

DURATION OF RULE: Permanent 

TYPE OF RULE: 

STAGE OF DEVELOPMENT: Concept Stage 

GOV LEVELS AFFECTED: None 

REASON FOR ACTION: 

To delete Paragraph (z) of Rule I5A NCAC 20 .0508. Permit Content. 

SCOPE >.'.ATURE SUMMARY : 

Paragraph (z) of Rule 1 5A NCAC 2Q .0508 states that "the permit shall not include sources for which there are no applicable 

requirements." At the time that this language was adopted, the Division of Air Quality was under the impression that sources for 

which there were no applicable requirements did not ha\e to be in a Title V permit. Hov\e\er. the EPA polic\ prohibits blanket 

exclusion of sources for which there are no applicable requirements from permitting. Therefore, this Paragraph needs to be 

remo\ed to present conflict with EPA's permitting requirements. 

APA =: E2682 

SUBJECT: New Source Performance Standards 

RULE CITATION #: 15A NCAC 2D .0524 

STATUTORY AUTHORITY: G.S. 143-2l5.3(a)(n: 143-215. 107(a)(5): 150B-21.6 

DIVISION SECTION: AIR QUALITY 

DIVISION CONTACT: Thom Allen 

DIVISION CONTACT TEL=: (919)733-1489 

D.ATE INITIATED: 8 12 98 

DURATION OF RULE: Pemianent 

TYPE OF RULE: 

STAGE OF DEVELOPMENT: Concept Stage 

GOV LEVELS A PFECTED: None 

REASON FOR A TION: 

To update exemptions and exclusions in 1 5 A Nl .AC 2D .0524. New Source Performance Standards. 

SCOPE "N.ATURE/SUMMARY : 

Rule 15.A NCAC 2D .0524 incorporates b> references the federal new source performance standards (NSPS) in 40 CFR Part 60. 

It identifies sections of 40 CFR Part 60 that are not incorporated b> reference. Further, it identities categories of sources covered 

under NSPS that are eligible for permit exemption. This rule needs to be re\ ised to update it and to correct an omission. 

The permit exemption rule is in the process of being amended to allow exemption of certain municipal waste landfills from 

permitting. Rule 15A NCAC 2D .0524 needs to be amended (in Paragraph (g)) to add municipal waste landfills to the list of 

sources that are eligible for pemiit exemption. 

Rule 15A NCAC 2D .0524 also needs to be amended to clarif\ that emission guidelines in 40 CFR Part 60 are not incorporated 

b\ reference in this rule. This can be accomplished b> adding to Paragraph (b) this language: "Subparts identified in 40 CFR Part 

60. Subpart C." 

APA =: E2683 

SUB.IECT: .Acti\ities Exempt from Permit Requirements 

RULE CITATION =: 15A NCAC 20 .0102 

STATUTORY AUTHORITY: G.S. 143-215.3(a)(l ): 143-215. 107(a)(4). (5); 143-215.108; 150B-21.6 

DIVISION SECTION: AIR QUALITY 

DIVISION CONTACT: Thom Allen 

DIVISION CONTACT TEL=: (919)733-1489 

D.ATE INITI.ATED: 8 12 98 

DURATION OF RULE: Permanent 

TYPE OF RULE: 

STAGE OF DEVELOPMENT: Concept Stage 

GOV LEVELS AFFECTED: None 

REASON FOR ACTION : 

To allow storage tanks co\ ered under 40 CFR part 60. Subpart K or Ka to use permit exemptions. 

SCOPE ^.ATURE SUMMARY: 

The permit exemption rule 15A NCAC 20 .0102. .Acti\ities Exempted from Permit Requirements. currentl_\ disqualifies, with 

a few exceptions, sources subject to new source perfonnance standards. (NSPS in 40 CFR Part 60 are incorporated b\ reference 

in the North Carolina rules under 15.A NCAC 2D .0524.) Currentl> tanks co\ered under 40 CFR Part 60. Subparts K and Ka. are 

not eligible for permit exemption. To make these tanks eligible. Rule I5.A NCAC 20 .0102 needs to be amended. This eligibilit\ 



622 NORTH CAROLINA REGISTER October 15, 1998 13:8 



RULE-MAKING AGENDA 



would be limited to facilities not required to have a permit under Title V. This amendment would allow tanks covered under these 
two subparts that store fuel oils to be exempted from permitting provided the tanks are at a facility not required to have a permit 
under Title V. Also Rule 15A NCAC 2D .0524, New Source Performance Standards, would also need amending to reflect the 
change in 15A NCAC 20 .0102. 

APA #: E2684 

SUBJECT: Activities Exempted from Permit Requirements 

RULE CITATION #: 15A NCAC 20 -0102 

STATUTORY AUTHORITY: G.S. l43-2l5.3(a)(l ): 1 43-2 1 5. 1 07(a)(4); 143-215.108 

DIVISION/SECTION: AIR QUALITY 

DIVISION CONTACT: Thom Allen 

DIVISION CONTACT TEL#: (919)733-1489 

DATE INITIATED; 8/12/98 

DURATION OF RULE: Permanent 

TYPE OF RULE: 

STAGE OF DEVELOPMENT: Concept Stage 

GOV LEVELS AFFECTED: None 

REASON FOR ACTION: 

To correct an omission that occurred with a previous amendment to 15A NCAC 20 .0102, Activities Exempted from Permit 

Requirements. 

SCOPE/NATURE/SUMMARY: 

Subpart (b)(2)(E)(l) of 15A NCAC 20 .0102. which is the miscellaneous exemption, contains a list of activities ineligible for the 

miscellaneous exemption. These activities are ineligible for the miscellaneous exemption because the Rule contains specific 

exemptions for these activities. However, several of the specific combustion exemptions are currently worded such that they are 

not available for Title V facilities. The specific exemption does not allow its use at a Title V facility. An example is 

non-emergency generators. The rule should be amended to allow the use of the specific exemption for sources at Title V facilities 

or to allow the use of the miscellaneous exemption for these sources at Title V facilities. 

APA #: E2685 

SUBJECT: Concrete Batch Plants 

RULE CITATION #: 15A NCAC 2D .0541 (New Rule) 

STATUTORY AUTHORITY: G.S. 143-2 l5.3(aKl): 143-2 15. 1 07(a)(5) 

DIVISION/SECTION: AIR QUALITY 

DIVISION CONTACT: Thom Allen 

DIVISION CONTACT TEL#: (919)733-1489 

DATE INITIATED: 8/12/98 

DURATION OF RULE: Permanent 

TYPE OF RULE: 

STAGE OF DEVELOPMENT: Concept Stage 

GOV LEVELS AFFECTED: None 

REASON FOR ACTION: 

To adopt a rule to control dust emissions form concrete batch plants. 

SCOPE/NATURE/SUMMARY: 

Concrete batch plants are a significant source of complaints and violations. The primary sources of problems are non-process 

fugitive dust, such as dust from haul roads, and improperly maintained bag filters on storage silos. To address these problems, 

a new rule is being considered to control fugitive dust from concrete batch plants and emissions for storage silos. The existing 

fugitive dust control rule could be amended to extend it to concrete batch plants or the general fugitive dust control rule that is 

being developed could include concrete batch plants. A specific rule ma> be developed to control emissions from storage silos. 

APA #: E2697 

SUBJECT: 1997-1998 Triennial Surface Water Quality Standards Review 

RULE CITATION #: 15A NCAC 2B .0100 and .0200 

STATUTORY AUTHORITY: G.S. 143-214.1 

DIVISION/SECTION: WATER QUALITY 

DIVISION CONTACT: Dianne Reid 

DIVISION CONTACT TEL#: (919)733-5083 

DATE INITIATED: 8/31/98 

DURATION OF RULE: Permanent 8/1/00 



13:8 NORTH CAROLINA REGISTER October 15, 1998 623 



RULE-MAKING AGENDA 



TYPE OF RULE; 

STAGE OF DEVELOPMENT: Draft Rule Stage 

GOV LEVELS AFFECTED: None 

REASON FOR ACTION: 

Ever\ three \ears. the U. S. Environmental Protection Agency (EPA) requires that the state review and revise, as necessary, the 

surface water quahtv standards and classifications rules w hich are designed to protect human health and aquatic life. This review 

process is mandated bv' the Clean Water Act and is termed the Triennial Review. The next reviev\' of North Carolina's water 

qualits standards is to be completed b_\ September I, 1999 and submitted to the EPA. The proposed rule changes are part of the 

Triennial Review process. 

COPE "NATURE, SUMMARY: 

The rule changes vsill include modifications to the surface water classifications and standards rules found in I5A NCAC 2B .0100 

and .0200. The major issues in this Triennial Rev iew consist of corrections and clarifications and additions related to: nutrient 

sensitive waters, endangered species, outstanding resource waters and the antidegradation policv'. These issues were identified 

through consultation with the EPA and the Triennial Review Advisor, Committee (TRAC). The TRAC was formed by the 

Division of Water Qualit) to provide more public input sooner in the rule-making process. Members of the TRAC included 

environmental interests, local governments, business, industp. and state and federal agencies. 

APA -: E2708 

SUBJECT: Common areas and guestrooms v\ ithin lodging establishments 

RULE CITATION #: 15ANCAC ISA .1808 and .1812 

STATUTORY AUTHORITY: G.S. 130A-248 

DIVISION-SECTION: ENVIRONMENTAL HEALTH. ENV. HEALTH SERVICES 

DIVISION CONTACT: Susan Grayson 

DIVISION CONTACT TEL^: (919)715-0923 

DATE INITIATED: 9/24/98 

DUR \TION OF RULE: Permanent 

TYPE "^FRULE: 

STAGE OF DEVELOPMENT: Draft Rule Stage 

GOV LEVELS AFFECTED: None 

SCOPE 'NATURE SUMMARY: 

.1808 seeks to reduce lighting requirements in lobbies, halls, stairs, in hotels, motels, tourist homes and other lodging 

establishments. 

.1812 should reduce lighting requirements in guestrooms of hotels, motels and lodging establishments. It also eliminates the 

requirement for sanitizing tableware in hotel efficiencies, per the ruling of the 1997 General Assembly. 



624 NORTH CAROLINA REGISTER October 15, 1998 13:8 



RILE-MAKISG PROCEEDIXGS 



A Notice of Rule-making Proceedings is a statement of subject matter oftlie agency's proposed rule making. The agency must 
publish a notice of the subject matter for public comment at least 60 days prior to publishing the proposed text of a rule. 
Publication of a temporaiy rule serves as a Notice oj Rule-making Proceedings and can be found in the Register under the 
section heading of Temporary Rules. A Rule-making Agenda published by an agency sen'cs as Rule-making Proceedings and 
can be found in the Register under the section heading of Rule-making Agendas. Statutory reference: G S. 150B-21.2. 



TITLE 15A - DEPARTMENT OF ENVIRONMENT 
AND NATURAL RESOURCES 



I5A NCAC lOC.OWO. .0200. .0300. .0400. Other rules may be 
proposed in the course of the rule-making process. 



CHAPTER 10 - WILDLIFE RESOURCES AND 
WATER SAFETY 



Authority for the rule-making: G.S. 113-132: 113-134: 113- 
I3H: 113-2^2: 113-2-3: 113-292: 113-302: 113-304: 113-305. 



SUBCHAPTER lOB - HUNTING AND TRAPPING 

TV Totice of Rule-making Proceedings is hereby given by the 
1 y North Carolina Wildlife Resources Commission in 
accordance with G.S. 150B-21.2. The agency shall subsequently 
publish in the Register the text of the rule(s) it proposes to adopt 
as a result of this notice of rule-making proceedings and any 
comments received on this notice. 

Citation to Existing Rules Affected by this Rule-Making: 

15A NCAC lOB.OlOO. .0200. .0300. Other rules may be 
proposed in the course of the rule-making process. 

Authority for the rule-making: G.S. 113-134: ll3-2'0: 113- 
2-3: 113-2-4: 113-2-6: 113-291: 113-29-: 113-300: 113-305: 
113-30-: 113-331: 113-333: 113-334: 113-337 



Statement of the Subject Matter: 

Trapping Regulations. 



Set .Amend Hunting and 



Reason for Proposed Action: To set amend hunting and 
trapping regulations, seasons and bag limits, which are 
necessary to manage and consent' the resource. The midlife 
Resources Commission may adopt this rule as a temporary rule 
pursuant to S.L. 199--0403 following this abbreviated notice. 

Comment Procedures: The Record will be open for receipt of 
written comments from October 15. 1998 to December 16. 1998. 
Such written comments must be delivered or mailed to the North 
Carolina Wildlife Resources Commission. 512 N. Salisbuiy 
Street. Raleigh. North Carolina 2^604-1188. 



Statement of the Subject Matter: Set/Amend Inland Fishing 
Regulations including Jurisdiction of Agencies. General 
Regulations. Game Fish and Nongame Fish. 

Reason for Proposed Action: To set'amend inland fishing 
regulations, size and creel limits, which are necessaiy to 
manage and conserx'e the resource. The Wildlije Resources 
Commission may adopt this rule as a temporaiy rule pursuant 
to S.L. 199--0403 following this abbreviated notice. 

Comment Procedures: This record will be open for receipt of 
written comments jrom October 15. 1998 to December 16. 1998. 
Such MTitten comments must be delivered or mailed to the North 
Carolina Wildlife Resources Commission, 512 N. Salisbuiy 
Street. Raleigh. North Carolina 27604-1188. 



SUBCHAPTER lOD - GAME LAND 
REGULATIONS 

A Totice of Rule-making Proceedings is hereby given by the 
J. y .\orth Carolina It'ildlife Resources Commission in 
accordance with G. S. 1 50B-21.2. The agency shall subsequently 
publish in the Register the text of the rulefsj it proposes to adopt 
as a result oj this notice of rule-making proceedings and any 
comments received on this notice. 

Citation to Existing Rules Affected by this Rule-Making: 

15A NC.4C lOD . 0002. . 0003. Other rules may be proposed in 
the course of the rule-making process. 



■K yt tc yt "K 



SUBCHAPTER IOC - INLAND FISHING 
REGULATIONS 

'\ Totice of Rule-making Proceedings is hereby given by the 
1 V North Carolina Wildlife Resources Commission in 
accordance with G.S. 150B-21.2. The agency shall subsequently 
publish in the Resister the text of the rule(s) it proposes to adopt 
as a result of this notice of rule-making proceedings and any 
comments received on this notice. 

Citation to Existing Rules Affected by this Rule-Making: 



Authority for the rule-making: G.S. 

270. 113-291: 113-305: 113-306. 



113-134: 113-264: 113- 



Statement of the Subject Matter: Set Amend Game Lands 
Regulations including General Regulations Regarding L'-ve and 
Hunting on Game Lands. 

Reason for Proposed Action: To set/amend seasons and 
regulate manner oj hunting on game lands, which are necessaiy 
to manage and consen'e the resource. The Wildlife Resources 
Commission may adopt this rule as a temporaiy rule pursuant 
to S.L. 1997-0403 jbllowing this abbreviated notice. 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



625 



RLLE-MAKI\G PROCEEDI\GS 



Comment Procedures: This record will be open for receipt of 
written comments from October 15. 1998 to December 16. 
1998. Such written comments must be dehvered or mailed to the 
North Carolina Wildlife Resources Commission , 512 A'. 
Salisbury Sireet. Raleigh, \orih Carolina 2'604-llHH. 



SUBCHAPTER lOF- MOTORBOATS AND 
WATER SAFETY 

A Tot ice of Rule-making Proceedings is hereby given by the 
J. y Sorth Camlina Wildlife Resources Commission in 



2 y .\ortl! Carolina Wildlife Resources Commission in 
accordance with CS. 150B-2I.2. The agency shall subsequently 
publish in the Resisier the text of the rule(s) it proposes to adopt 
as a result of this notice of rule-making proceedings and any 



ace 

publish ,,, ,,.^ .>^^....w .,.t .^.w ^, ,,.^ , 
as a result of this notice of rule-ma, 
comments received on this notice. 

Citation to Existing Rules Affected bv this Rule-Making: 

15.4 \C.4C I OF .1)31'. Other rules may he proposed in the 
course of the rule-making process. 

Authority for the rule-making: O' .S' '5.4-3: '5.4-15. 

Statement of the Subject Matter: AC* WAKEZO.XES. 

leason for Proposed Action: The Stanly Count}- Board of 
Conuuissioners initialed the Xo-lt'ake Zone Modification 
Pursuant to G.S. '5.4-15. 

Comment Procedures: This record will be open for receipt of 
written comtuents from October 10. 1998 to December 16. 1998. 
Such written comments must be deliverd or mailed to the \orth 
Carolina Wildlife Resources Commission, 512 A'. Salisbuiy 
Sireet. Raleigh. \C 2 '604- 11 88. 

TITLE I9A - DEPARTMENT OF TRANSPORTATION 

CHAPTER 2 - DIVISION OF HIGHWAYS 

SUBCHAPTER 2D - HIGHWAY OPERATIONS 

A Totice of Rule-making Proceedings is hereby given by the 
1 V \drth Carolina Department of Transportation. Divisions 
of Highway in accordance with G.S. 150B-21.2. The agency 
shall subsequently publish in the Register the text of the ridels) 
it proposes to adopt as a result of this notice of rule-making 
proceedings and any comments received on this notice. 

Citation to Existing Rules Affected by this Rule-Making: 

19.4 .\C.4C 02D.U415. Other rules may be proposed in the 
course of the rule-making process. 

Authority for the rule-making: G.S. 136-18(5). 

Statement of the Subject Matter: Rule states conditions and 



times for \orth Carolina drawbridges to open. 

Reason for Proposed Action: ,4mendments are proposed as a 
result of a request by the Carteret Count}' Board of 
Commissioners. Drawbridge openings on US 70 over Beaufort 
Channel in Beaufort are proposed to be reduced to alleviate 
traffic congestion. Tlie U.S. Coast Guard approved the revised 
opening schedule effective August 10. 1998. 

Comment Procedures: .4ny interested person may submit 
written comments on the proposed rule by mailing the comments 
to Emily Lee. NC DOT PO Box 25201. Raleigh. AC 2'61l by 
Februarv 15. 1999. 



626 



NORTH CAROLINA REGISTER 



October 15, 1998 



13:8 



PROPOSED RULES 



This Section conlains the text of proposed rules. .At least 60 days prior to the pitblieatioii oj text, the ageiiey pidilished a Notice 
oj Rule-making Proceedings. The agency must accept comments on the proposed rule for at least 30 days from the publication 
date, or until the public hearing, or a later date if specified in the notice by the agency. The recpiired comment period is 60 days 
for a rule that has a substantial economic impact oJ at least five million dollars (S5. 000.000). Statutory reference: G.S. I50B- 
21.:. 



TITLE 1 - DEPARTMENT OF ADMINISTRATION 

Notice is hereby given in accordance with G.S. 150B-21.2 
that the Department of .Administration intends to adopt the 
rulescitedas I NCAC 5B .0315-.0317. .1604-.1605. amend the 
rules cited as 1 NCAC 5A .0001. .0008. .0012: J NCAC 5B 
.010I-.0102. .0201. .0203. .0206. .0208. .0301. .0303. .0305- 
.0306. .0309-.0310. .0314. .0503. .0601. .0701. .0901. .0905- 
.0906. .1101-. 1102. .1105. I401-.I402. .1501. .1505. .1507. 
.1509-.1513. .1518-.152I. .1601-.1603. .1901. .1903 and repeal 
the rules cited as 1 NCAC 5B .0302. .0401 -.0403. .0801 -.0802. 
.1301. .1303. .1517. .1906:1907. .1909 Notice of Rule-making 
Proceedings was published in the Register on August 14. 1998 
for I NC.4C 5A .0001. .0008, .0012: 1 NC.4C 5B.0101-.0102. 
.0201. .0203. .0206. .0208. .0303. .0305-.0306. .0309. .0314. 
.0901. .0905. .0906. .1101-. 1 102. .1105. 
.1505. .150^. .1509-. 151 3. .1518. .1520- 
.1901. .1903: 1 NC.4C 5B .0402-.0403. 
.1909: 1 NCAC 5B .0315. .0317. . 1605: 
Notice of Rule-making Proceedings Mas published in the 
Register on March 2, 1998 for 1 NCAC 5B .0301-.03C2. .0310. 
.0316. .0401. .0801 -.0802. .1301. .1519. .1604. .1906. 



.0503. 


.0601. .0701 


1401-. 


1402. .1501. 


.1521. 


.1601-. 1603. 


.1303. 


.1517 .1907 



solicitations handled by the Division of Purchase cS- Contract, 
universities and State agencies as well as contract language 
consistency and protest procedures. These rule changes clarify 
the process for all State prociuvment. which was altered 
significantly by SL 1997-412. 

Comment Procedures: .Any person interested in making 
written or verbal comments to these proposed rule changes 
should submit such comment to R. Glen Peterson. General 
Counsel. NC Department of Administration. 116 West Jones 
Street. Raleigh. NC 27603-8003: telephone (919) 733-^232: fax 
(919) "33- 95 " I : email: glen _peterso)f a mail. doa. state, nc. us. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of state or local government funds. These Rules do not 
have a substantial economic impact of at least five million 
dollars (S5. 000.000) in a 1 2-month period. 

CHAPTER 5 - PURCHASE AND CONTRACT 

SUBCHAPTER 5A - DIVISION OF PURCHASE AND 
CONTRACT 



Proposed Effective Date: April I. 1999 

A Public Hearing will be conducted at 2:00 p.m. on November 
3. 1998 at the .Administration Building. ABC Conference Room. 
5"' Floor 116 West Jones Street. Raleigh. NC 27603. 



1 NCAC 5B .0101-.0102. 
.0305:0306. .0309, .0314- 
.0601, .0701, .0901, .0905- 
.140 1 -.1402, .1501, .1505, 

.1520:1521, .1601:1603, 
■S.L. 1 99'-4 12 requires the 



Reason for Proposed Action: 

/ .VC4C 5A .0001, .0008, .0012; 

.0201, .0203, .0206, .0208, .0303, 

.0315, .0317, .0402:0403, .0503, 

.0906, .1101:1102, .1105, .1303, 

.1507, .1509:1513, .1517:1518, 

.1605, .1901, .1903, .1907, .1909 ■ 

changing of certain rules relating to the increase in purchasing 

benchmarks and delegation limits for universities and agencies. 

In addition, there is a need to change clarif- other rules as they 

pertain to the university and agency purchasing policies and 

procedures us a result of the increase. Further modifications 

are needed to improve the procurement process and to provide 

more flexibility for the universities and agencies. 

I SCAC 5B .0301:0302, .0310, .0316, .0401, .0801:0802, 

.1301, .1519, .1604, .1906 - Session Law 1997-412 amended 

State procurement Icm'S. increasing benchmarks for universities 

and State agencies, and also mandated the Secretaiy of 

.Administration to make rules in certain areas of procurement as 

a result of the benchmark changes. These include advertising of 



.0001 RESPONSIBILITY 

The Department of Administration is responsible for 
administering the state's program for the acquisition, 
management, and disposal of personal prop e rty*, property, as well 
as. the acquisition of services for jts agencies. The Secretary of 
the Department of Administration (Secretary) is authorized and 
responsible for adopting and carrying out the rules promulgated 
herein. The administration of this program is delegated to the 
State Purchasing Officer (SPG) who reports to the Secretary. 

Authority G.S. 143-49. 

.0008 FORMS: PROCEDURES: TERMS AND 
CONDITIONS 

The Division of Purchase and Contract establishes procedures 
for acquiring e quipm e nt, mat e rials, suppli e s, commodities. 
printing and services and prescribes fomis, consistent language. 
terms and conditions applicabl e — te — seeli — act i ons, and 
advertisement requirements, applicable to all agencies for such 
action. The procedures, forms, consistent language, ternis and 
conditions and advertisement requirements shall be established, 
taking into consideration market conditions and trends, legal 
requirements, and factors detennined to be jn the state's best 
interest. These shall be furnished to aJJ agencies. 

Authority- G.S. 143-51: 143-53: 143-55: 143-60. 



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627 



PROPOSED RULES 



.0012 DEFINITIONS 

(a) For the purpose of this Chapter. agenc\ is defined as all 
departments, institutions, boards, commissions. uni\ersities. or 
other units of the Stat e . State (includina the Division of Purchase 
and Contract), and communit\ colleges and local school 
administrative units, unless specificalK exempted herein b\ 
reference. For the purpose of identilMn" a special responsibilits 
constituent institution, as designated In the Llni\ ersits Board of 
Go\ernors. just the name "uni\ersit\(ies)" shall be used to 
distinguish any differences in the rules. 

(b) A ser\ ice contract shall mean an\ agreement in which an 
independent contractor performs ser\ ices requiring specialized 
knowledge, experience, expertise or similar capabilities for a 
state agencN for compensation from stat e fund s . in\oKing an 
expenditure of public funds. The ser\ ices ma_\ include (b\ \\a> 
of illustration, not limitation) services such as maintenance of 
buildings or equipment, auditing, film production, emplovee 
training and food services, provided that the service is not 
primarilv for review, analvsis or advice in formulating or 
implementing improvements in programs or serv ices (in v\hich 
case rules relating to consultants shall be applicable). 

(c) U'here the tenn "offer" is used, it refers to a bid. proposal 
or offer submitted in response to an Inv itation for Bids. Request 
for Proposals. Negotiation, or Request for Quotations. 

(d) For the purpose of this Chapter, commodit^(ies) is defined 
as any equipment, materials or supplies, h does not include 
services or printing. 

AulhorinU.S. 143-49: 143-53: 143-53.1: 116-31. lU. 

SUBCHAPTER 5B - PURCHASE PROCEDURES 



r e qu e sting agencv user and modified as necessar> h\ the 
Division of Purchas e and Contract, to accomplish the intent of 
the rules of this Subchapter. It shall b e . bv the natur e of th e 



commodity' or patt e rn of us e r d e mand, not int e nd e d for r e p e titiv e 
use; Sometimes, such other tv pe specifications mav be pr e s e nt e d 
in th e form of used, including, but not limited to. "brand name 
or equal" or. in th e form of or "brand name onlv specific". 

.Authority G.S. 143-49(2): 143-53. 

.0203 DEVELOPMENT OF SPECIFICATIONS 

|a) A standard specification is intended for general use. 
applicable insofar as practicable to the needs of agencies and 
kept current bv the Standards S e ction. Division of Purchase and 
Contract. In fomiulating such a specification, advisorv 
committees made up of personnel from various agencies, and the 
private sector are often employed for advice and assistance. 
This type of specification is customarily offered also for the 
review and comments of manufacturers and suppliers who mav 
participate in future bidding on the items in question. 

(b) North Carolina's purchasing program is built on the 
principle of competition. There js a dutv to seek competitive 
offers, except as mav be permitted by statute or rule, from 
qualified and res ponsible sources of supply. Where competition 
is available, h js every purchaser's responsibility to use write 
specifications and requirements that are reasonable to satisjy the 
need, but not undulv restrictive, which shall encourage 
competition [n the open market and result in the best possible 
contract for the commodity, printing or serv ice needed. 

.4llthorI^^■G.S. 143-49i2i: 143-53. 



SECTION .0100 - REQUISITIONING 

.0101 PROCEDURE 

Using agencies shall request quotation, bid and purchase 
actions of the Division of Purchase and Contract bv means of 
electronic or w ritten requests. 

.Atithority-G.S. 143-49: 143-51: 143-55. 

.0102 NERBAL REQUESTS 

Verbal or other means of request are not satisfactory 
substitutes for electronic or written requests except in 
emergencies. Electronic or Writt e n written confirmation must 
follow any such request made in an emergency situation. 

.Aiithont}-G.S. 143-49: 143-51: 143-55. 

SECTION .0200 - SPECIFICATIONS 

.0201 TYPES OF SPECIFICATIONS 

There shall be two general types of purchase specifications. 
.\ standard specification shall be originated and developed bv 
the Standards S e ction. Division ot" Purchase and Contract. It 
shall be comprehensive in nature and intended for repeated use. 
The other tvpe of specification shall be originated bv the 



0206 SUBMISSION FOR ADOPTION 

Upon completion of all necessary studies, rev iews and drafts, 
any proposed standard specification shall be submitted to the 
SPO for consid e ration and r e comm e ndation to th e Secr e tary'. 
consideration. When a specification is adopted as a standard, it 
becomes applicable to state agencv purchases generally. A 
standard specification may be modified bv the Division of 
Purchase and Contract on an interim basis as deemed necessary 
or advantageous until such time as the S e cr e tary SPO can 
consider the proposed rev ision. 

.-tiithoiit}- G.S. !43-49(2i: 143-53. 

0208 QUALIFIED PRODUCTS LIST 

A qualified products list (QPD is a t>pe of specification 
which mav be adopted as a standard, standard by the Division of 
Purchase and Contract. The essential characteristic of this 
procedure is the examination and prequalification of brands and 
models of products on the basis of samples and tests. The 
prequalification limits bidding offers to products included on the 
list (OPD- Vlanufacturers are invited to submit products for 
evaluation and inclusion on the list. Sources for manufacturers 
are the Division's active bidder mailing -Ikts lists, if still 
maintained, and notifications of interest received in advance 
from other firms. The Division mav impose a deadline for 



628 



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October 15, 1998 



13:8 



PROPOSED RULES 



submission of samples. If a product is added to the list, it is then 
eligible to be offered against an Invitation for Bid s , jn response 
to a solicitation document. 

Authority- G.S. 143-49(2): 143-53. 

SECTION .0300 - PROCUREMENT AUTHORIZATION 
AND PROCEDURES 

.0301 CONTRACTING REQUIREMENTS 

(a) W h e r e th e total requirem e nts for any giv e n commodity' or 
s e rvic e involv e an exp e nditur e in e xc e ss of th e e xp e nditur e 
b e nchmark e stablished und e r th e provisions of G.S. M3 53.1. 
and wh e re competit i on is s o l icit e d, s e al e d offer s s hall b e 
solicit e d b\ dir e ct mailing. Rul e s applying to se rv i c e contract s 
do not apply to local s chool administrativ e units or communitv.' 
co l l e g e s. 

(%) — In addition to Paragraph (a) of this Rul e , for th e 
procur e m e nt of e quipm e nt, materials, and suppli e s, s e al e d off e rs 
s hall b e solicit e d b\ th i s Division by dir e ct mail and by 
adv e rtis e m e nt in a n e wspap e r of stat e wid e circulation or by 
e l e ctron i c m e dia when deemed more ad\antageou5 for c e rtain 
it e ms or commoditi es at l e ast — 1 days prior to th e dat e 
d e signat e d for op e ning of th e bids. 

(e) — In addition to Paragraph (a) of this Rul e , for th e 
procur e m e nt of s e rvic e s, th e following shal l apply: 

f+^ Th e final d e cis i on making authority in r e gard to any 

phas e of procur e ment or p e rformanc e of an\ servic e 
contract is with th e SPO. — In addition to s e rvic e 
contract s d e l e gat e d und e r Rul e s .O 'l Ol and .1301 of 
this Subchapt e r, th e SPO max d e l e gat e ag e nci e s th e 
authority to hand le th e solicitation phas e for contracts 
ov e r th e b e nchmark e stablish e d und e r G.S. 1 4 3 53.1. 

{¥) For e ach s e rvic e contract, th e using ag e ncy s hall 

pr e par e a task d e scription of th e serv i c e s and d e sir e d 
r es ults. For stat e wid e or multiagency term contracts 
this Division will e stab l ish th e ta s k d e scription of 
se rvic e s and d e sired results. Ta s k d e scriptions shall 
contain all of the following: 

bM the date(s) of s e rvic e (Th e contract shall not b e 

for more than thr ee y e ars including e xt e nsions 
and r e newals, without th e prior approval of th e 
SPO.): 

{B) detailed s p e cifications or typ e and l e v e l of 

work r e quir e d; 

{G) what th e Stat e will furnish: 

fB^ what th e contractor will furni s h: 

fE^ th e m e thod, sch e dul e , and proc e dur e s for 

billing and paym e nts: 

fF^ other terms and conditions, sp e cifications or 

proc e dures b e aring on th e conduct of th e work. 

f34 Upon completion of th e task d e scription and d es ir e d 

r e sults. — compet i tion — shaH — be — so l icit e d. — v\ h e r e 
availabl e , utilizing a RFP or IFB. which shall contain 
th e task d e scription and desir e d r e sults, and sp e cify or 
provid e for all of th e following: 
fA-) — th e laws of North Carolina s hall gov e rn th e 



contract; 
fB) th e contract shall — b e cancelabl e upon a 

s p e cifi e d writt e n notic e at any t i m e by the State 

for unsati s factory p e rformanc e or for the 

conv e nience of th e Stat e ; 
(€) provid e for th e option to require a performance 

bond or oth e r suitabl e m e an s of ensu i ng 

faithful p e rformanc e wh e n d ee m e d by the State 

to b e n e c e ssary ; 
{&) that the contract i s e nt e r e d into in comp l ianc e 

with Stat e and Federal antitrust laws; 
(£^ the — contractor — slwH — furnish — aW — work e r's 

comp e nsation, liability insuranc e , and oth e r 

insuranc e as may b e r e quired to prot e ct hims e lf 

and th e Stat e from claims which may aris e ; 

fF^ paym e nt sch e dul e ; 

{G^ pric e adjustm e nt provisions, if any; 

{U) id e ntify th e ag e ncy liai s on p e rsonnel and any 

oth e r ag e ncy r es ourc e s that will b e available to 

th e contractor: 

<-l^ th e crit e ria for e valuation; 

(J^ r e qu es t — a — d e scription — of — the — offeror's 

qualifications and r e f e rences: 
<-14) have the cost of th e s e rv i ce broken down by 

compon e nts; 
(t^ have — the — offeror — id e ntify — the — proposed 

methodology for accomplishing the work (if 

not furnished in th e RFP). 
An e xc e ption to Paragraph (c) of this Rul e i s wh e r e an 
e m e ra e ncv condition e xists. 



(4)- 



Aft e r op e ning, and compl e tion of th e e valuation, th e 



u s ing ag e ncy shall pr e par e a writt e n r e comm e ndation 

for award, and if over th e b e nchmark e stablished 

und e r G.S. 1 4 3 53.1. shall s ubmit a cop\ of all off e rs 

r e c e iv e d and th e ir r e comm e ndation to this Division 

for award of contract or oth e r action d ee m e d 

n e c e ssary b\' th e SPO (Examp les : canc el lation. 

negotiation, e tc.). Notice of th e Division' s deci s ion 

shall b e sent to the using agency. 

Except where a waiver, special delegation, exemption, or an 

emergency purchase is permitted b\ rule, all purchases involving 

the expenditure of public funds made by universities and other 

agencies for commodities, services and printing, not covered by 

statewide tenn contracts, shall comply with the following 

delegations and procedures: 

( 1 ) Small Purchases: A small purchase is defined as the 
purchase of commodities, services or printing, not 
covered by a term contract, involving an expenditure 
of public funds of five thousand dollars (S5.000) or 
less. The executive officer or his designee, of each 
agency shall set forth, jn writing, purchasing 
procedures for making small purchases. The 
awarding of contracts for small purchases shall be the 
responsibility of the using agency. The SPO may 
require a copy of the small purchase procedures be 
sent to the Division of Purchase and Contract. 

(2) Purchases Governed by General Delegation or 



13:8 



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October 15, 1998 



629 



PROPOSED RULES 



Statute: 

(a) For purchases made b\ a u^i\ersit^ or aaencv 
invoK ing an expenditure of public Funds over 
five thousand dollars ($5.000). up to the 
benchmark established for a uni\ersit\ under 
the provisions of G.S. 116-31.10. and up to the 
general delegation limit for agencies 
established b\ the SPO under the prov isions of 
G.S. 143o3(a)(2): 

(_ij Competition shall be solicited: 

(ii) Solicitation documents requesting or 
inviting offers shall be issued: 

(iii) Solicitation documents shall include 
standard language, including terms and 
conditions issued bv the Div ision of 
Purchase and Contract, unless prior 
written approval js obtained from the 
Division. jf additional temis and 
conditions are used, thev shall not 
conflict with Division's standard terms 
and conditions, unless prior written 
approval is obtained from the Division: 
and 

(iv) Mailing lists, if still maintained bv the 
Division of Purchase and Contract, mav 
be requested and used jn addition to 
mailing lists maintained bv the 
universit^ or agencv for the purpose of 
soliciting competition. 

(b) in addition, agencies and universities shall 
advertise their solicitations through the 
Division of Purchase and Contract, effective 
September _L 1998. for the follov\ing 
purchases: 

{]} Agencies: For purchases involving an 

expenditure of public funds exceeding 

ten thousand dollars (SI 0.000). up to the 

general delegation limit for an agencv 

established by the SPO under the 

provisions of G.S. l43-53(a)(2): 

(ii) L'niversities: For purchases involving an 

expenditure of public funds exceeding 

twenn five thousand dollars (S25.000). 

up to the benchmark established for a 

universit\ under the provisions of G.S. 

116-31.10. 

Agencies and universities mav advertise sooner 

than the effective date and ma\ also advertise 

solicitations on smaller dollar purchases 

through the Division of Purchase and Contract. 

(c) The awarding of contracts under the statutory 
limit for universities and the general delegation 
for all other agencies, shall be the 
responsibility of the using agencv. 

(3) Competitive Bidding Procedure: Where the total 
requirements for commodities, services or printing 
jobs involve an expenditure of public funds in excess 



ill 



of the expenditure benchmark established under the 
provisions of G.S. 1 16-31 .10 or the general 
delegations established by the SPO under the 
provisions of G.S. l43-53(a)(2). the competitive 
bidding procedure as defined in G.S. 143-52 shall be 
utilized as follows: 

(a) Sealed offers for commodities and printing 
shall be solicited by ihe Division of Purchase 
and Contract v ia adv ertisement: 

(b) For serv ice contracts, the SPO delegates to the 
universities and other agencies the authority to 
solicit sealed offers for their university agencv 
in accordance with the rules established for 
Subitems (2)(a) and (b) of thjs Rule. .After 
opening and completing the evaluation of 
offers received, the agencv shall prepare a 
written recommendation for award, and if over 
the benchmark established under G.S. 1 16- 
31.10 or the general delegations established bv 
the SPO. shall submit a copy of aH offers 
received and their recommendation of award or 
other action to the Division of Purchase and 
Contract for approval or other action deemed 
necessary bv the SPO (Examples: cancellation, 
negotiation, etc.). Notice of the Division of 
Purchase and Contract's decision shall be sent 
to the agency. The awarding of contracts for 
services shall be the responsibility of the using 
agency: 

(c) Sealed offers for statewide term contracts for 
commodities, printing and services shall be 
solicited by' the Division of Purchase and 
Contract via adv ertisement: 



(4) For each serv ice contract handled bv the agencv. the 
agency shall prepare a task description of the services 
and desired results. Task descriptions shall contain all 
of the following: 

(a) The date(s) of service (The contract shall not 
be for more than three years including 
extensions and renewals, without the prior 
approval of the SPO.): 

(b) Detailed specifications or type and level of 
v\ork required: 
W hat the State shall furnish: 



m 



What the contractor shall furnish: 



The method, schedule, and procedures for 

billing and payments: and 

Other subject matters bearing on the conduct of 

the work. 
Rules applying to service and printing contracts do 
not apply to local school administrative units or 
community colleges. 



Auihorin- U.S. 143-49: 143-52: 143-53: 143-53.1. 
.0302 .MAILING LISTS (REPEALED) 



631) 



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October 15, 1998 



13:8 



PROPOSED RULES 



Authority G.S. 143-49: 143-52. 

.0303 TELEGRAPH, FACSIMILE, AND 
TELEPHONE OFFERS 

Telegraph, facsimile, and telephone bids or proposals ar e not 
acc e ptabl e offers shall not be accepted in response to s e al e d 
comp e t i tive bids or proposals, solicitations that are required to 
be sealed. 

Authority- G.S. 143-49: 143-52: 143-53. 

.0305 PUBLIC OPENING 

(a) Advertised procurements shall be publicK op e n e d, in 
accordanc e with the procur e m e nt docum e nt instructions, opened 
at the time, date, and place identified jn the procurement 
document. At the time of opening, the The names of the 
companies, the manufacturer! s) and catalog number(s) of the 
item(s) they have offered and the prices, deliveries and pavment 
terms they have submitted shall be tabulated and this tabulation 
shall become public r e cords subj e ct to th e provisions of Rul e s 
.030Q and .1501 of this Subchapt e r, record, except as provided 
in Paragraph (b) of this Rule. 

(b) Under a two step process the cost/price offer shall not 
become public record until the technical offer(s) has been 
evaluated (first step) and then onlv those determined, by the 
agencv which issued the solicitation document, to have an 
acceptable technical offer shall have their cost/price offer 
opened (second step). The cost/price otTers from offerors whose 
technical offer was deemed unacceptable shall remain unopened. 
The opening of the cost'price offers shall be publicK opened, by 
means of notifsing the companv(s) with the acceptable technical 
offer(s) of the time and place for the opening. At least two 
agencv working days notice shall be given prior to the opening. 
In addition, there shall be at least two agency employees present 
at the opening. 

Authority G.S. 143-49: 143-52: 143-53. 

.0306 LATE OFFERS. MODIFICATIONS, OR 
WITHDRAWALS 

No late offer, late modification, or late withdrawal shall be 
considered unless received before contract award, and the offer, 
modification, or withdrawal would have been timeK but for the 
action or inaction of State agency personnel directly serving the 
procurement process. It is the sole responsibility of the offeror 
to have his offer delivered on time, regardless of the mode of 
delivery used, including the U.S. Postal Service or any other 
delivery services available. 

Authority G.S. 143-49: 143-52. 

.0309 EVALUATION 

In d e termining th e award of contracts, bona fid e offers s hall 
b e considered and e valuated as provid e d b)' statut e and 
applicab le rules. Un e x e cuted offers or an off e r without delivery 
shall not b e accept e d. Nonaccoptanc e of an off e r shall not be 



constru e d as outright r e j e ction or that it lacks m e rit but that 
anoth e r is d ee m e d more advantag e ous. — During th e p e riod of 
evaluation and prior to award, poss e ssion of th e off e r s and 
accompanying infoimation shall b e limit e d to p e rsons designated 
by th e SPO. and to thos e in using agenci e s who ar e r e spon s ibl e 
for participating in the evaluation. Aft e r award of th e contract, 
th e compl e t e fi le shall b e availabl e to any int e r e st e d p e r s on with 
th e e xc e ption of trade secrets subject to th e provisions of Rul e s 
.1501 and .1518 of this Subchapter. 

(a) In determining the award of contracts, bona fide offers 
shall be considered and evaluated as provided by statute and 
applicable rules. The evaluation criteria to be used jn 
determining the award of contract shall be identified jn the 
procurement document. 

(b) An unexecuted offer or an offer without a delivery time 
shall be rejected. 

(c) During the period of evaluation and prior to award, only 
the information provided m the tabulation is public record. 
Possession of offers, including any accompanying information 
submitted with the offers, shall be limited to persons jn the 
agencv who are responsible for handling the offers and 
accompany ing information, and to others determined necessary 
by the agencv' which issued the solicitation document, for the 
purpose of evaluation and award of contract. Offeror 
participation jn the evaluation process shall not be permitted. 
Any communication with an offeror that may be necessary for 
purpose of clarification of their offer shall be conducted by the 
agencv which issued the solicitation document. After award of 
the contract or the need for the item or service js canceled, the 
complete file shall be available to any interested party with the 
exception of" trade secrets subject to the provisions of Rules 
.1501 and .1518 of this Subchapter. 

Authoiit}- G.S 143-49: 143-52: 143-53. 

.0310 NOTIFICATION OF AWARD 

Jf a solicitation js required to be advertised through the 
Division of Purchase and Contract, then notice of the resulting 
contract award shall be posted via the Division of Purchase and 
Contract's home page by the agencv issuing the solicitation 
document jn accordance with Rule .0316 of this Section. In 
addition. Aft e r after contracts are awarded, successful 
companies and agenci es shall be notified in writing or 
e l e ctron i cally, electronically by the agency issuing the 
solicitation document. 

Authority G.S. 143-49: 143-52: 143-53. 

.0314 SOLICITATION DOCUMENTS 

(a) An alternate acqui si tion procurement method to the 
Invitation for Bids (IFB) is a Request for Proposals (RFP). 
When using a RFP, the rules of Subchapters 5 A and 5B of this 
Chapter shall also apply. A RFP may also be handled as a two 
step process. 

(-H For th e purcha se of e quipm e nt, mat e rials and suppli e s 
(commoditi e s), wh e n us i ng a RFP, th e rul e s of this 
Subchapt e r shal l apply. 



13:8 



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631 



PROPOSED RULES 



(^ Th e Rul e s applying to th e use of a RFP for s e rvic e 
contract s ar e sp e c i fi e d in Rul e .0301 of th i s S e ction, 
(b) A RFP may also b e hand le d as a two st e p proc e ss. Wh e r e 
Q two st e p proc e ss is us e d only th e t e chnica l propo s al shall b e 
opened on th e op e ning dat e . Th e cost propo s al s hall b e op e n e d 
on l \ if the t e chn i cal propo s al is d e t e rmined b_v th e Stat e to b e 
a cc ep ta ble . 

(b) For the purpose of Subchapters 5A and 5JB of this 
Chapter, a solicitation document is defined as a written Request 
for Quotes (RFQ). RFP or an IFB. 

(c) All agencies shall use the IFB or RFP document, 
whichever js applicable, when soliciting competition on 
contracts valued over tw ent\ five thousand dollars ($25.000). 
The IFB and RFP solicitation documents used b\ agencies shall 
require bidders or otTerors to certit\ that each bid or offer js 
submitted competitiveh' and w ithout collusion. 

AulhoriiyGS. 143-49: 143-52: 143-53: 143-54. 

0315 DIVISION OF REQUIREMENTS 

An agencN shall not divide requirements in order to keep the 
expenditure under their benchmark or delegation, and thereb\' 
avoid following the appropriate contracting requirement, in the 
case of similar and related items and groups of items, the dollar 
limits apply to the total cost rather than the cost of an\ single 
item. 

AulhnrinG.S. 143-52: 143-53. 

0316 ADVERTISEMENT REQUIREMENTS 

(a) Unless already required by statute, effectiv e September I. 
1998 all advertisements required by rule shall be through the 
Division of Purchase and Contract via the Division's home page 

on the internet, ft" advenisement js required by rule, the .Aiiihority G.S. 143-52: 143-53. 
solicitation shall be advertised at least once and at least 10 days 



(d) The exact format and instructions for submitting the 
advertisement, summary notice, and award notice will be 
furnished to aj] agencies l>y Ihe Division. 

(e) Exceptions to this Rule are as follows: 
(I ) When it is deemed by the agency "s executive officer 

or lijs designee that there js a valid reason for the 
agency not to transmit the advertiseinent or award 
notice electronically, that agency mav submit the data 
to tlie Division, so tlie Division may transmit jt 
electronicallv; or. the agencv may place the 
advertisement (excluding the complete solicitation 
document) via newspaper. ff advertised via 
newspaper, the agency which issued the solicitation 
document shall be responsible for the advertisement 
and the av\ ard notice shall not be req uired. Some 
valid reasons include comp uter equipment failure or 
networking diftlculties. or insufficient copies of 
samples for a printing job. 

If there js an attachment to a solicitation that the 
agency determines will not l3e electronically 
transmitted, then the solicitation document, w hen 
electronically transmitted, shall include instructions to 
contact the agencv which issued the solicitation to 
obtain the attachment. 



{21 



(3) If an agency detenu ines that jt js not feasible to 
electronicallv transmit a particular solicitation 
document through the Div ision's home page, then the 
agency shall electronically transmit a summary notice, 
the same way as jf they had electronically transmitted 
the solicitation document, which will instruct 
someone inquiring on the Div ision's home page about 
the solicitation, to contact the agency for a hard copy. 



prior to the date designated for opening. This Rule does not 
prevent solicitation of offers by additional direct mailings or 
additional advertisement by an agency. 

(b) Agencies required bv rule to advertise their solicitations 
shall electronically transmit the required data directly to the 
Division's home page. The required data shall include, the 
complete solicitation document (specifications, requirements, 
terms and conditions, etc), with agencv name, buver name- 
phone number and address for accessing hard copies ot' the 
solicitation, solicitation identification number, title [a short 
description of die commodity, service or printin g requirement), 
and the opening date, time and place, if the solicitation requires 
potential otTerors to attend a mandatory conference or mandatory 
site visit, this information shall also be furnished with the 
advertiseinent. to include date and time, location, and contact 
person and phone number. 

(c) Within three agency working davs from award of contract 
that has been advertised through the Division, agencies shall be 
required to electronically transmit an award notice directly to the 
Div ision's home page on the internet. The award notice shall be 
posted for at least 30 consecutive calendar davs. This aw ard 
notice shall identify the contract and award infonnation. 



.0317 MANDATORY CONFERENCES/SITE 
VISITS 

(a) It is recommended, except in unusual cases, for agencies 
to only urge and caution potential offerors to attend scheduled 
conferences or site visits. 



(b) When a solicitation requires potential offerors to attend a 
mandatory conference or mandatory site visit, the date, time, 
location, and other pertinent details of the conference or site visit 



shall be given in the solicitation document, and 



the 



advertisement (if required by rule). 

(c) if only one potential offeror attends the mandatory 
conference or mandatory site visit, the conference or sjte visit 

be 
If 



may continue to be conducted, but tfie solicitation shall 
canceled immediately following the conference or site visit 



this occurs, the agencv shall investigate whv only one potential 
offeror was in attendance and ascertain jf there js any 
competition available, if jt js detennined that competition js 
available, the agency shall again attempt to obtain competition 
by following the rules of thjs Subchapter, unless othenvise 
permitted bv rule, if it is determined that there is no competition 
available, then the procurement may he handled as a waiver as 
permitted bv rule. 



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(d) Any and aU questions by a compan\ regarding a 
solicitation document shall be addressed to the purchaser named 
on the document. Any and aH revisions to the solicitation 
document shall be made only by written addendum from the 
purchaser. Verbal communications from w hatever source are of 
no effect. 

Authority G.S. 143-52: 143-53. 

SECTION .0400 - INFORMAL PROPOSALS 
(QUOTATIONS) PROCEDURE 

.0401 GENERAL DELEGATION (REPEALED) 

Authority G.S. 143-52: 143-53: 143-53.1. 

0402 REVIEW BY BOARD OF AWARD AND 
SECRETARY OF ADMINISTRATION 

Th e r e vi e w and award proc e dur e is not a requirem e nt in acting 
on propo se d contracts l e ss than th e b e nchmark establish e d in 
G.S. 143 53.1. How e v e r, any controv e rsial matt e rs or qu e stions 
of policy which might b e involv e d in th e s e propos e d contracts 
may b e r e vi e w e d with th e Board of Award and S e cr e tary'. 

Authority G.S. 143-52: 143-53. 

.0403 DIVISION OF REQUIREMENTS 

An ag e ncv shall not divid e r e quir e m e nts in ord e r to k ee p them 
und e r th e e stablish e d b e nchmark or g e n e ral d e l e gation amounts. 
artd — th e r e by — avoid — the — r e quir e d — comp e t i tiv e — bid proposal 
proc e dur e or th e r e quir e d quotation proc e dur e , which e ver 
appli e s. In th e cas e of similar and r e lat e d it e m s and groups of 
it e ms, th e dollar limits apply to th e total cost rather than the cost 
of any singl e it e m . 

Authority G.S. 143-52: 143-53. 

SECTION .0500 - REJECTION OF OFFERS 

0503 NEGOTIATION 

If a ll offers arc r e j e ct e d, th e S e cr e tary may author i z e th e SPG 
to negot i ate the purchas e , with th e avsard of contract handl e d in 
accordanc e with th e rul es in this Subchapt e r 

If an agencv does not receive a satisfactor\ offer in response 
to a solicitation and all offers are rejected, negotiations mav be 
conducted with all known qualitled sources of supply to satisfy 
the requirement, if it is determined by the agency that issued the 
solicitation document that soliciting offers again would serve no 
purpose. The negotiations shall be conducted by that agency if 
under their benchmark or delegation. Negotiations shall be 
conducted in writing and shall include standard language and 
terms and conditions issued by tfie Division of Purchase and 
Contract, unless otherwise provided by rule, ff tfie negotiations 
are conducted with only one source or if only one source 
responds to the negotiations, the reason for lack of competition 
shall be documented in writing for public record. Negotiations 



may also be conducted under conditions that merit a y\aiver of 
competition, or in other situations that are advantageous as 
determined by the SPO. 



Authority- G.S 143-52: 143-53: 143-60. 

SECTION .0600 - PURCHASE OF USED ITEMS 

.0601 GENERAL PROCEDURES 

Wh e n it app e ars to th e SPO that th e acquisition of us e d 
e quipm e nt, mat e rials or suppli es is in the public int e r es t, 
competit ive p roce dur e s shall b e follow e d wh e r e ver feasible. 

Rules of this Subchapter regarding seeking competition shall 
be followed, wherever feasible, when h appears that the 
acquisition of used commodities is jn the public interest. 

AuiliorityG.S 143-53. 

SECTION .0700 - REMOVAL OF CERTAIN ITEMS 
FROM GENERAL CONSTRUCTION 

.0701 POLICY 

As may b e practicabl e , th e S e cr e tary' may r e mov e it e ms from 
g e n e ral construction contracts and r e quir e thos e it e ms to be 
purcha se d und e r th e rul es of this Chapt e r. 

Every agency shall thoroughly review the items being included 
in a construction/ renovation project and remove any items that 
they consider are non-related to frie actual 
construction renovation of the building. items that are 
considered commodities, or just furnishings, to complete the 
project for use by tlie agency, shall be handled in accordance 
with the rules ot" tfus Chapter. Items that are usually removed 
for construction renovation projects include carpet, office panel 
systems, food service equipment, and furniture. If an agency 
determines that one of these items, or any item that is normally 
handled as a commodity purchase, is best suited for inclusion jn 
the construction renovation project, their justification shall be 
documented in writing for public record. 

Authority- G.S 143-53. 

SECTION .0800 - PRINTING 

.0801 GENERAL POLICY (REPEALED) 

Authority G.S. 143-49: 143-53. 

.0802 PROCEDURE (REPEALED) 

Authority G.S 143-49: 143-53. 

SECTION .0900 - INSPECTION AND TESTING 

.0901 RESPONSIBILITY 

In general, it is the responsibility of the receiving agency to 
inspect all mat e rials, suppli e s, and equipment commodities. 



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633 



PROPOSED RULES 



services and printing upon deli\er\ to insure compliance witli 
the contract requirements and specifications. How e v e r, wh e n 
th e contract r e quir e s an insp e ction by th e Divi s ion of Purchas e 
and Contract, it shal l b e conduct e d by a d es ign ee of th e Division. 
However, there are certain commodities that require inspection 
by a designee ot" the Division ot" Purchase and Contract. When 
purchasing one of those commodities, agencies shall include jn 
their solicitation document the requirement that payment for the 
commodirv shall be subject to the inspection and acceptance of 
the commodity by a designee of the Division. The commodities 
listed, as determined by the SPO. are based on their complexity 
and cost, and shall be furnished to all agencies. 

AiahoriixG.S. 143-53: 143-60. 



covered by a statewide term contract from any other sources. 

(c) A term contract is based upon competition, where 
available with the companies being advised as to yvhose business 
they are competing for and. if successful, whose business they 
have earned. 

(d) Agencies may handle agency specific term contracts for 
use by their agency jf the expenditure over the term of the 
contract is under their benchmark or delegation, and the 
commodity, printing, or service js not covered by a statevNJde 
tenn contract. 



(e) Rules applying to service and printin g contracts do not 
apply to local school administratixe units or community colleges. 

AuthohnG.S. 115C-522: II5D-5H.5: 143-52: 143-53: 143-55. 



.0905 SPECIFICATIONS 

Ih e SPO When h [s determined to be adyantageous. the 
agency which awarded the contract may authorize re\ isions to a 
contract sp e cificat i on, specification, including any cost 
adjustment associated with any such rey ision. as part of contract 
administration. JJ" an increase [n cost results in the total contract 
value being more than the agency's benchmark or delegation, 
then prior xvritten approval shall be obtained from the Division 
of Purchase and Contract, regardless of who initially awarded 
the contract. 

Authority (J.S. 143-53: 143-60. 



.1102 DETERMINING FACTORS 

In determining whether a product should be on a statewide 
tenn contract, the Division consid e rs shall consider such factors 
as volume, nature of the product, repetitiveness of use. relative 
stability of prices, transportation costs and other appropriate 
considerations. In determining whether a product should be on 
an agency specific term contract, the agency shall consider such 
factors as volume, nature of the product, repetitiveness of use, 
relative stability of prices, transportation costs and other 
appropriate considerations. 

Authority G.S. 143-52: 143-53: 143-55. 



.0906 REPORT OF DISCREPANCY 

Where product s commodities, services or printing delivered 
fail to meet the specifications or contract requirements, the 
discrepancy shall be r e port e d to th e Division of Purchas e and 
Contract for r e solution, resolved by the agency which issued the 
solicitation document. 

Authority GS. 143-53: 143-60. 

SECTION .1100 - TERM CONTRACTS 

.1101 USE 

(a) Tenn contracts, known also as indefinite quantity or 
requirements contracts, are used generally to establish suppliers 
and prices of a giyen commodity, group of commoditi e s 
commodities, printin g, or services for a period of time w ithout 
guaranteed quantities being specified. Such contract s g e n e rally 
serve Statexs ide tenn contracts shall be handled bv the Division 
of Purchase and Contract and are used generally to consolidate 
normal requirements of various ah agencies into one agreement. 
While many of the state's tenn contracts are effective for a 
period of one year, conditions sometimes call for issuance for a 
shorter or longer period. 

(b) A term contract is a binding agreement between purchaser 
and seller to buy and sell certain commoditi e s commodities, 
printing, or services at certain prices and under stipulated terms 
and conditions. It is neither an "approved list" nor a list of 
approved or ceiling prices. No agency may purchase any 
suppli e s, mat e r i als, equipment commodities, printing, or services 



.1105 SPECIAL ITEMS 

In situations where a general ty pe of item is covered by a term 
contract but a special type item is needed for a particular 
application, the Division s hould b e consu l t e d for appropriat e 
act i on, agency mav proceed with the purchase of the special 
type item under the rules of this Chapter. The need for the 
special tvpe item in lieu of the general type item shall be justified 
by' the agency/user in writing and the agency file documented for 
public record. 

Authority G.S. 143-52: 143-53: 143-55. 

SECTION. 1300- SMALL PURCHASES 

.1301 PROCEDURES (REPEALED) 

Autliority G.S. 143-53. 

.1303 DESIGNATION OF AUTHORIZED PERSONS 

P e rsons authoriz e d to mak e purchas e s ar e to b e d e signated in 
yvriting and b e h e l d pe r s o n ally liable for unauthoriz e d purchas e s 
or improp e r pract i c e s. 

Author it}- G.S. 143-53. 

SECTION .1400 - WAIVER OF COMPETITION 

.1401 POLICY 

Under certain conditions, and othen\ ise if deemed to be in the 



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PROPOSED RULES 



public interest, competition may be waived. Conditions 
permitting waiver includ'; but are not limited to cases where 
performance or price competition are not available; where a 
needed product or service is available from only one source of 
supply; where emergency action is indicated; where competition 
has been solicited but no satisfactory offers received; where 
standardization or compatibility is the overriding consideration; 
where a donation predicates the source of suppK; where 
personal or particular professional services are required; where 
a particular medical product or service, or prosthetic appliance 
is needed; where a product or service is needed for the blind or 
severely disabled and there are overriding considerations for its 
use; where additional products or services are needed to 
complete an ongoing job or task; where products are bought for 
"over the counter" resale; where a particular product or service 
is desired for educational, training, experimental. de\ elopmental 
or research work; where equipment is alread\ installed, 
connected and in service, and it is determined advantageous to 
purchase it; where items are subject to rapid price tluctuation or 
immediate acceptance; where there is evidence of resale price 
maintenance or other control of prices, lawful or unlawful, or 
collusion on the part of companies which thwarts normal 
competitive procedures; where the amount of the purchase is too 
small to justify soliciting competition or where a purchase is 
being made and a satisfactory price is available from a previous 
contract; where the requirement is for an authorized cooperative 
project with another governmental unit(s) or a charitable 
non-profit organization(s); where a used item(s) is available on 
short notice and subject to prior sale. 

Author in- G.S. 143-53. 

.1402 APPROVAL AND DOCUMENTATION 

Although competition rnay be waived for proper cause, its use 
is required wherever practicabl e ; and furth e r, wh e r e practicable. 
Where waiver is contemplated, e xc e pt for d e l e gat e d, sma l l, or 
authoriz e d printing purchases, i t must b e e xplain e d i n writing to 
th e Div i sion, agencies are authorized to negotiate with a 
compan\(s) jn an effort to acquire the qualit\ of commoditN. 
service or printing needed at the best possible price. deliver\'. 
terms and conditions, when the expenditure js less than their 
benchmark or delegation. A solicitation document requesting or 
inviting an offer(s) shall be issued by the agencN; including 
standard language, terms and conditions issued b\ the Division 
of Purchase and Contract. Under an emergenc\ or pressing need 
situation, a solicitation document requesting or inviting an 
offer(s) shall be issued by the agenc\. including standard 
language, terms and conditions issued by the Division, unless 
circumstances prohibit their use. Negotiations may also be 
conducted with a company! s) for contracts exceeding an 
agency's benchmark or delegation, but are subject to the prior 
approval of the Secretary, except where otherwise permitted by 
rule. 

Authority G.S. 143-53. 

SECTION .1500 - MISCELLANEOUS 



.1501 CONFIDENTIALITY 

(a) Trade secrets which the offeror does not wish disclosed 
shall be identified as follows: Each page shall be identified in 
boldface at the top and bonom as "CONFIDENTIAL". Cost 
information shall not be deemed confidential. 

(b) To promote maximum competition and to protect the 
public competitive procedure from being used to obtain 
infonnation which would normally not be available otherwise, 
the Division of Purchase and Contract agency which issued the 
solicitation document may maintain the confidentiality of certain 
types of infonnation. Such information includes trade secrets, 
as detemiined by North Carolina law, and like information as the 
SPG or the agency's executive officer or his designee may 
determine to insure the integrity' of the public purchasing 
process. 

Trad e s e cr e ts which th e off e ror do e s not wish di s clos e d shall 
b e id e ntifi e d as follows: Each pag e shall b e id e ntifi e d in 
boldfac e at th e top and bottom as "CONFIDENTIAL". Cost 
informat i on shall not be d ee m e d confid e nt i al. 

Authority G.S. 143-52: 143-53. 

.1505 FUNDS FROM DIFFERENT SOURCES 

(a) All public funds irrespective of source, whether special, 
federal, local, gifts, bequests, receipts, fees, etc., or state 
appropriated, used for the purchase, rental, lease, installment 
purchase and lease-purchases of e quipm e nt, mat e rials, s uppl ie s 
commodities, printing and services are to be handled under the 
provisions of Article 3 of G.S. 143 and in accordance with rules 
adopted pursuant thereto by the Division of Purchase and 
Contract. 

(b) Community Coll e g e s and local e ducational adm i nistrative 
unit s ar e not requir e d to us e th e Division of Purchas e and 
Contract on r e ntal s , l e a se s and se rvic es . Rules applying to 
sen ice, rental, lease, and printing contracts do not apply to local 
school administrative units or community colleges. 

Authority G.S. 143-53: 143-60(5). 

1507 CHANGE IN CORPORATE STRUCTURE 

In cases where contractors are involved in corporate 
consolidations, acquisitions or mergers, the Division of Purchas e 
and Contract agency which issued the solicitation document 
resulting jn the contract may negotiate agreements for the 
transfer of contractual obligations and the continuance of 
contracts within the framework of the new corporate structures 
but with the understanding that the state's contracts are not 
instruments for sale and shall not be assigned. 

Authority G.S. 143-53. 

.1509 PURCHASING FROM OR THROUGH 
AGENCY EMPLOYEES 

Every reasonable effort shall be made to avoid making 
purchases from or through employees of any agenc>. Prior 



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635 



PROPOSED RULES 



written approxal from the S e cr e tary SPO is required in an\ 
instances which ma\ develop of doing business with such 
personnel. In deciding whether to grant approval, the S e cr e tan. 
SPO shall consider the t\pe item or service needed, the 
prevailing market conditions, whether competition is available, 
the cost invoked, and the effects of doing business with the 
emplovee. 



costs, the Division may offer its services, in addition to 
purchasing and contracting, to non-state agencies with respect to ^L 
preparation of specifications, contracts for services, inspection ^P 
and testing of products, expediting deliveries and advising as to 
market conditions. 



Aulhorin- G.S. 143-49(6): 143-49.1: 143-51 



Aiithonn- G.S. 143-33: 143-60(5). 



.1510 



USE OF PL RCHASING POWER FOR 
PRIVATE GAIN 

The purchasing pov\er of the state or the agency shall not be 
used for private advantage or gain. Purchases under contracts 
made by the sta t e , state or the agency, except those in 
accordance with G.S. 143-58.1 shall not be allowed for personal 
use out of private funds nor shall agencies place orders for 
articles for ownership by employees or other individuals. 

Aiitlmritr G.S. 143-53: I43-5.S.1. 



.1511 ANTITRUST VIOLATIONS 

In instances of identical offers or where there are otherwise 
indications of collusion, awards may be made in a manner 
intended to discourage or prevent its continuance as deemed to 
represent the state's best interest. Instances of suspected 
antitrust violation shall be reported to appropriate law 
enforcement authorities by the SPO. agency which issued the 

solicitation document. In submitting off e rs to th e Division, e ach Authorin- G.S. 143-49: 143-53: 1 43-60. 
company must c e rtify und e r p e nalty of p e rjury that th e ir off e r 



.1513 COOPERATIVE PURCHASING 

Where an agency' is a participant in an authorized cooperative 
project w ith another governmental activ ity or with a charitable 
non-profit organization, goods and services necessary' to the 
project shall be acquired according to thes e Rules; the rules of 
this Chapter: provided, however, that if the interest of the State 
would be better served by one of the following acquisition 
methods, the SPO may do so with prior approval of th e 
Secr e tary: authorize that acquisition method to be used: 

(1 ) bv making acquisition on behalf of such governmental 
activity or charitable non-profit organization; or 

(2) by authorizing acquisition on the State's behalf under 
the provisions of G.S. 143. Article 8: or 

(3) by authorizing acquisition on the State's behalf under 
the provisions of another State or another 
governmental entity, provided due consideration is 
given by the Se cr etary SPO to the differences in 
purchasing rules, regulations and procedures (_ the 
contractinn entity. 



has been arriv e d at comp e titiv e ly and without collusion and that 
th e y hav e not vio l at e d any f e d e ral or North Carolina antitrust 
laws. 

Aulhorin- G.S. 143-53: 143-54. 



.1512 AVAILABILITY OF SERVICES TO 
CERTAIN NON-STATE AGENCIES 

(a) The Division of Purchase and Contract shall make 
purchasing serv ices available to certain non-state agencies as 
defined by G.S. 143-49 and I43-49.I. This may be affected by 
budgetary allowances for personnel, time and related costs. 

(b) Th e Division s hall inquir e p e riodically among non stat e 
ag e nci e s to determin e th e typ e s of it e ms availabl e from stat e 
t e rm contracts for wh i ch th e y would want the Division to 
contract for th e m. B ased o n this infomiation. th e Division shall 
d e v e lop an implem e nting sch e dul e of it e m s tog e th e r with th e 
tim es for handling th e m and th e m e thods of purchasing or 
contracting. Th e Divi s ion has Final d e cision as to it e ms included 
on th e sch e dul e . 

fe) (bj Where non-state agencies covered bv this provision 
elects to participate in a contract, its resulting contractual duties, 
obligations and responsibilities shall be the same as those 
required for agencies. Non-state agencies covered by this 
provision shall make payments to suppliers in a timely manner 
and in accordance with the temis of the contracts. 

fd^t£l As may be practicable in terms of personnel, time and 



1517 GOODS REQUIRING IMMEDIATE 
ACCEPTANCE 

In th e purchas e of it e ms which ar e subj e ct to rapid pric e 
fluctuation or imm e d i at e acc e ptanc e , th e SPO may award 
contracts as deemed advi s a ble provi de d that e ach such action is 
mad e a matt e r of r e cord and r e port e d promptly to th e Board of 
Award and S e cr e tary. 



Authority G.S. 143-52: 143-49. 

1518 BOARD OF AWARD 

(a) When the dollar value of a contract for the purchase, 
lease, or lease purchase of e quipm e nt, mat e rials, and suppli e s 
commodities or printin g exceeds the b e nchmark e stablish e d bv 
G.S. 143 53.1. agency's benchmark or delegation, the Board of 
Award (Board) shall canvass the Division's recommended 
action. This also includes reporting of emergency and pressing 
need purchases over the agency's benchmark or delegation. The 
Division will submit the Board's recommendation (award, 
cancellation, approval, negotiation, etc.) to the Secretary. The 
Secretary may either concur w ith the recommendation of the 
Board by awarding contracts or approving other recommended 
action, or take other action as deemed necessary. A Board of 
Award meeting is comprised of at least two voting members. 
The SPO or designee conducts the meeting and one division 
employee takes the minutes of the meeting. The Adv isory 
Budget Commission mav designate tyvo or more v oting members 



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PROPOSED RULES 



(2) 
(3) 



to serve as members of the Board. The S e cr e tary SPO may 
further designate the following persons who may serve in this 
capacity in the absence of member(s) of the Commission: 

(1) Assistant Superintendent for Financial Services, 

Department of Public Instruction; 

Representative from Attorney General's Office; 

All Council of State members with the exception of 

the Governor. 
These alternate members shall not further delegate this 
responsibility. The Board meets weekly. 

(b) R e commendations for th e award of contracts shall b e 
r e vi e w e d only b> th e Division of Purcha se and Contract, th e 
Board, and the S e cr e tary ' . Records shall be kept of each meeting 
and made public by the SPO unless the SPO determines a 
specific record of the meeting needs to be confidential due to the 
nature of the purchase (Ex: Law enforcement surveillance 
equipment). The Secretar\ may elect to proceed with the award 
of contracts without the recommendation of the Board in cases 
of emergencies or in the event that a Board is not available. In 
such cases, contracts awarded without Board review shall be 
reported to a subsequent Board as a matter of record. 

(c) Exemptions: Approval by the Board or Secretary is not 
required for the following purchase actions: exemption by 
statute, by rule, by Special Delegation, or where one agency is 
buying fi-om another agency or through State or Federal Suiplus. 

Aiithority'G.S. 143-53: 143-3 18. IN(IO). 

.151- PROTEST PROCEDURES 

A party wanting to prot es t a contract award hand le d by th e 
Divis i on of Purchas e and Contract must submit a writt e n r e qu es t 
for a prot es t m ee ting to th e SPO which must b e r e c e' v e d in th e 
Division of Purcha se and Contract within 30 cons e cutiv e 
cal e ndar days from th e date of th e prot es t e d contract award. 
This l e tt e r must contain specific sound r e asons and any 
supporting docum e ntation for wh\ the party i s prot e sting th e 
award or th e prot e st will be prompt l y r e jected. If th e SPO can 
r e nd e r a d e cision bas e d on th e facts without a me e ting, a wr i tten 
r e sponse with a deci s ion will b e r e nd e r e d within 10 consecutiv e 
cal e ndar day s of th e r e c e ipt of th e prot e st l e tt e r. If not. th e SPO 
wil l schedule a m ee ting with th e prot e sting party to h e ar th e ir 
complaint. — This m ee ting will b e h e ld within 30 cons e cutiv e 
cal e ndar days aft e r r e c ei pt of th e writt e n prot e st. Th e SPO will 
r e spond to th e prot e sting part) in writing with a d e cision within 
30 cons e cut i v e cal e ndar days from th e dat e of th e prot e st 

m e eting. All d e ci s ion s of th e SPO s hall b e th e final 

administrativ e r e vi e w. 

(a) To insure fairness to al] offerors and to promote open 
competition, agencies and the Division of Purchase and Contract 
shall actively follow-up and be consistent jn responding to an 
offeror's protest over contract awards. 

(b) This Rule applies only to contracts with an actual or 
estimated dollar value over ten thousand dollars ($10.000). his 
recommended that agencies establish procedures to handle an 
offeror's concerns for contracts with less dollar value. 

(c) When an offeror wants to protest a contract a\\ arded by an 
agency over ten thousand dollars (SI 0.000). the agency and the 



offeror shall comply with the following: 

(1) The offeror shall submit a written request for a protest 
meeting to the agency's executive officer which shall 
be received by the agency's executive officer's office 
within 30 consecutive calendar days from the date ot' 
the contract award. The executive officer shall 
furnish a copy of this letter to the SPO within five 
consecutive calendar days of receipt. The offeror's 
letter shall contain specific sound reasons and any 
supporting documentation for why they have a 
concern with the award. If the letter does not contain 
this information, or ]f the executive ofUcer determines 
that a meeting would serve no purpose, then he may, 
within 10 consecutive calendar days from the date of 
receipt of the letter, respond in writing to the offeror 
and refuse the protest meeting request. A copy of the 
executive officer's letter shall be forwarded to the 
SPO. 

(2) If the protest meeting is granted, the executive officer 
shall attempt to schedule the meeting within 30 
consecutive calendar days after receipt of the letter, or 
as soon as possible thereafter. Within 10 consecutive 
calendar days from the date of the protest meeting, the 
executive officer shall respond to the offeror in 
writing with his decision. A copy of the executive 
officer's letter shall be forwarded to the SPO. 

(3) The agency shall notilS' the SPO. m writing, ot" any 
further administrative or judicial review of the 
contract award. 

(4) The executive officer may appoint a designee to act 
on his behalf under this Rule. 

(d) When an offeror wants to protest a contract awarded by 
the Secretary over ten thousand dollars (SI 0,000), the SPO and 
the offeror shall comply with the following: 

( 1) The offeror shall submit a written request for a protest 
meeting to the SPO which shall be received by the 
Division within 30 consecutive calendar days from the 
date of the contract award. The offeror's letter shall 
contain specific sound reasons and any supporting 
documentation for why they have a concern with the 
award. If the letter does not contain this information. 
or if the SPO determines that a meeting would serve 
no purpose, then he may, within 10 consecutive 
calendar days from the date of receipt of the letter, 
respond in writing to the offeror and refuse the protest 
meeting request. 

(2) if the protest meeting ]s granted, the SPO shall 
attempt to schedule the meeting within 30 consecutive 
calendar days after receipt of the letter, or as soon as 
possible thereafter. Within 10 consecutive calendar 
days from the date of the protest meeting, the SPO 
shall respond to the offeror jn writing with his 
decision. 

Authority G.S. I50B-2; 150B-22: I50B-23; 143-53. 

.1520 DEFAULT PROCEEDINGS; DEBARMENT 



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(a) Th e SPO. who ma\ consult with th e Board of Award. The 
agenc\ which issued the solicitation document resuitina jn the 
contract ma\ find a contractor in default of contract for failing 
to perform in accordance with the contract requirements, terms 
and conditions. If a contractor is found in default of contract, 
the SPO. agenc\ which issued the solicitation document 
resulting m the contract, may take action, immediate if 
necessan. to purchase the needed products commodities, 
printing or services on the open market and charge any 
additional cost for the product commodity, printing or service 
and expense for doing so to the defaulting contractor. (If th e r e 
wa: . a p e rformance bond reqii i r e d of th e company as part of the 
contract, it ma> b o r e d ee med with th e cash proce e ds going to th e 
Stat e .) in addition, that company ma \ b o r e mov e d from all 
mailing lists and d e barr e d from doing b u sine ss with an\ ag e ncy. 
for a p e r i od of tim e at th e discr e tion of th e SPO. Jf an agenc\ 
finds a contractor in default, such action and the circumstances, 
shall be reported by the agency to the Division of Purchase and 
Contract jn \\riting. This does not limit an\ other remedies that 
ma\ be available to the State or agencv. 

(b) The Di\ ision mav remove the company from any mailing 
lists which may be utilized and debar the company from doing 
business with the agency, or any agency, for a period of time at 
the discretion of the Division. 

Authorin- G.S. 143-49: 143-52: 143-53: 143-60. 

.1521 FAITHFUL PERFORMANCE 

(a) A bond, or other suitable means of e nsuing insuring 
faithful performance, may be required of the contractor at the 
contractor's expense, e xp e ns e and in th e discr e tion of th e Stat e 
Pu r chasing Offic e r. 

(b) Liquidated damages, in the form of a monetary penalty for 
late delivery, may be prov ided for in the contract, as a means of 
insuring faithful performance from the contractor. 



Commission; State Utilities Commission; 

(8) services yvhich are merely incidental to the purchase ^ 
of supplies, materials or equipment such as V- 
installation services; 

(9) contracts for construction of and structural changes to 
public buildings: 

(10) personal services provided by' a professional 
individual (person) on a temporary or occasional 
basis, including (bv' way of illustration, not limitation) 
those provided by a doctor, dentist, attorney, architect, 
professional engineer, scientist or performer of the 
fine artN and similar professions; the exemption 
applies only if the individual is using his/her 
professional skills to perfomi a professional task; a 
personal sery ice may also be a consulting serv ice; 

(11) services provided directly by an agency of the state, 
federal or local government, or their employees when 
perfonning the service as a part of their normal 
governmental function. 

Wh e r e Whether such purchases are made directly by using 
ag e nci e s, the agency or by the Division, comp e tition is r e quir e d 
wh e r e \ e r possibl o . unl e ss a small purchas e is being made, good 
purchasing practices shall be followed. 

(b) In addition to products and ser\ ices exempted by' Statute, 
the SPO may exempt other products and services from purchase 
through the Division provided that the SPO mi 'js findings: 

( 1 ) that competition will not enhance the price that the 
State yvould receive for the product or service; and | 

(2) that competition y\ill not enhance the quality of the 
product or service that the State would receive. 

(c) Contracts for bakery products and dairy products shall be 
ayvarded through the Division of Purchase and Contract, if over 
the agency's expenditure benchmark. 

Authorin- G.S. Z4-6(B): 143-53: 143-56: 143-62. 



Authority G.S. 143-52: 143-53. 

SECTION .1600 - EXEMPTIONS, EMERGENCIES, 
AND GENERAL AND SPECIAL DELEGATIONS 

.1601 EXEMPTIONS 

(a) Except as provided in Paragraph (c) of this Rule, it is not 
mandatory for the items and services listed in this Rule to be 
purchased through the Division of Purchase and Contract. 

(1) purchase of liquor: 

(2) perishable articles such as fresh meats; 

(3 ) published books, manuscripts, subscriptions to printed 
material, packaged copyrighted softy\are products, 
and like material; 

(4) services provided by individuals bv direct 
employment contracts y\ ith the state; 

(5) public utility services (gas. ysater and electricity ); 

(6) telephone, telegraph and cable sery ices furnished by 
those companies; 

(7) services provided which are subject to published tariff 
rates as established b\ the Int e rstate Comm e rc e 



.1602 EMERGENCIES 

(a) Th e SPO may mak e or authoriz e .An agency is authorized 
to make purchases of commodities commodities, printing or 
services in the open market in cases of emergency' or pressing 
need. For this purpose, a pressing need is one arising from 
unforeseen causes including but not limited to delay by' 
contractors, delay in transportation, breakdoyvn in machinery, or 
unanticipated volume of yvork; y\hile emergencies are defined 
as situations yvhich endanger lives, property or the continuation 
of a vital program and which can be rectified only by immediate 
on-the-spot purchases or rental of e quipm e nt, suppli e s, mat e rials. 
commodities, printing or services. 

fb) — Wh e n circumstanc e s r e quire such action, and th e 
e xp e nditur e is o\ e r th e ag e ncy "s benchmark establish e d by G.S. 
1 4 3 53.1. v e rbal approval shall b e obtain e d from th e Division of 
Purchase and Contract if tim e p e nnits. Subs e qu e ntly, wh e th e r 
or not such prior approval vxas possible, an e xplanation of th e 
e m e rg e ncy must b e r e port e d in writing to th e Division. — The 
Division will r e port th e purchas e of e quipni e nt. mat e rials and 
supplies commoditi e s and printing to the Board as a matt e r of 
r e cord. 



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(b) Aoencies are authorized to negotiate v\ ith a compan\(s) in 
an effort to acquire the quaiitt of commodits. ser\'ice or printing 
needed at the best possible price. deli\er\. terms and conditions. 
A soh'citation document requesting or inviting an offer(s) shall 
be issued, including standard language, terms and conditions 
issued by the Division of Purchase and Contract, unless 
circumstances prohibit their use. 

(c) When emergenc\ or pressing need action is necessary, and 
the expenditure js over the agency's benchmark or delegation, 
prior verbal appro\al shall be obtained from the Division if time 
permits. Subsequently, whether or not such prior appro\al was 
possible, if the expenditure is o\er the agency's benchmark or 
delegation, an explanation of the emergency or pressing need 
purchase shall be reported in writing to the Di\ision. The 
Division shall report such purchases of commodities and 
printing to the Board as a matter of record. 

Auihorin- U.S. 143-53: 143-5': 143-60. 

.1603 SPECIAL DELEGATIONS 

(a) The SPO may authorize, by special delegation, any agency 
to purchase specific it e ms and quantities, commodities, printing 
or services without limitation as to expenditure. Such delegation 
is normally confined, but not limited to. it e ms and quant i ti e s. 
commodities, printing or services which by their nature or 
circumstance, such as perishableness. transportation costs, local 
conditions or local availability, would result in handling by the 
Division of Purchase and Contract serving no practical purpose. 
Ey ery such delegation shall be ir isriting and made a matter of 
record. 

(b) The SPO may require that offers received under such 
delegations be sent to the Division for determination of the 
successful company. 

(c) The Division of Purchas e and Contract shall periodically 
review its special delegations of purchase to ascertain the 
ayailability of these supp l i e s, materials, equipment commodities, 
printing or services and their continued suitability for delegation. 

Authority- G.S. 143-53. 

.1604 GENERAL DELEGATIONS 

The general purchasing delegation for agencies (except the 
universities) shall be not more than ten thousand dollars 
(SIO.OOO). The SPO may loy\er or raise this general delegation 
for a specific agency, up to the amount established by G.S. 143- 
53.1. after consultation with the State Budg et Officer and the 
State Auditor for State agencies, and upon consideration of the 
agency 's (except the universities) overall capabilities, including 
staff resources, organizational structure, training, purchasing 
compliance reviews, electronic communication capabilities, and 
audit reports. If an agency \vishes to obtain an increase in their 
general delegation, they shall submit a request in yvriting. 
outlining their overall capabilities, to tlie SPO for his 
consideration. 



.1605 COMPLIANCE REVIEWS 

(a) The Di' ision of Purchase and Contract shall conduct 
compliance re\ lews on purchasing practices at all agencies. The 
purpose of tlie compliance reviews shall be for determining if 
agencies are complying with North Carolina's purchasing 
statutes and rules adopted thereunder, and whether they should 
continue having the same level of delegation, have it reduced, or 
do they quality for an increase. A copy of the compliance report 
shall be provided to tlie agency's executive officer, the State 
Auditor, the State Budget Officer, the local school 
administrative unit's Board, any of which are applicable. 

(b) The Division's staff shall have the authorit\ to enter the 
premises and obtain an agency's purchasing records for the 
purpose of tlie compliance review the agency shall cooperate 
w ith the Division's staff, prov iding them with requested records, 
adequate office space for conducting the review, and agency 
purchasing staff for discussion ot' purchase transactions. The 
Division shall not unnecessarily require of the agency anv more 
than is needed to complete the review. 

(c) The SPO shall have the authority to lovser. or raise if 
requested, an agency's (excluding the universities) general 
delegation, if tfie results of a compliance review by the 
compliance staff of tfie Division, merits such action as 
determined bv the SPO. The SPO mav low er the delegation to 
any level, including the complete removal of tlie delegation, 
depending on the nature of anv v iolations found. The SPO shall 
report to tlie University's Board of Governors the results of any 
compliance review conducted at the universities, and shall 
prov ide to them his recommendation, based on those results, on 
what that university's benchmark should be. 

(d) The SPO shall prov ide to agencies, upon request, the 
Division's asnstance in educational training for an agency's 
staff to better acquaint them with the purchasing statutes and 
rules. 

Aialiorit}' G.S. 143-53. 

SECTION .1900 - RECORDS AND FILES 

1901 RECORD MAINTENANCE 

Except where State law provides to the contrary, after the 
award of a contract, the records of the Division an agency are 
public documents. Purchase files shall be maintained for a 
period of five years after the expiration date of the contract. 

AuthorityG.S. I43B-I0(fi: 143-53. 

.1903 FILES 

(a) Each r e quisition r e c e iv e d bv th e Division of Purchas e and 
Contract shall b e a s sign e d a uniqu e , s e qu e ntial control numb e r 
and plac e d in a pr e numb e r e d fold e r. Thi s numb e r shall th e n 
b e com e th e fil e numb e r for th e r e quisition and s ubs e qu e nt 
docum e nts i s su e d by th e D i vision. Each contract file shall be 
identified individually so rt can be readily located and 
referenced. 



Auihoritv G.S. 143-53. 



(b) Th e fil e s hall includ e th e r e quisition, worksh ee t, mailing 



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639 



PROPOSED RULES 



Wst; — off e r s . — tabulation. — r e lat e d — corr e spond e nc e . — and — the 19. 1998 at the Moore Hall Auditorium. iiUversii}- of .\orth 

Carolina at Pembroke. Pembroke. NC. 

Reason for Proposed Action: /;; the United States. Indian 
tribes have had special relationships with state and federal 
governments. State recognition is the state government's 
acknowledgment of an interrelated Indian people's historic 
existence as a tribe. Identified as a separate and distinct group, 
exercising social, political, or economic influence over its 
people. Tribal representatives have expressed the concern that 
official recognition of mere "organizations " threatens tribal 
status and sovereignty' as they presently exist. 

Comment Procedures: .411 written comments should be made 
to Gregory .4. Richardson. Executive Director of the North 
Carolina State Commission of Indian .Affairs, at the Commission 
offices. 2r West Jones Street. Raleigh. NC 27603-1336. 
Telephone (919) '33-3998. E-mail 

Gregory _Rlchardson amall.doa.state.nc.us. .411 written 

comments must be received by Mr Richardson no later than 
5:00 p.m. EST on November 18. 1998. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of state or local government funds. These Rules do not 
have a substantial economic Imp '■ct of at least five million 
dollars I S 5. 000.000) In a 12-month viod. 

CHAPTER 15 - COMMISSION OF INDIAN AFFAIRS 



c e rtificatio n o f award to th e succ e s s ful contractor. All purchase 
transactions shall be documented. As applicable, each file shall 
include: 

( 1 ) Original offers if in uritini;. or written documentation 
of verbal offers received. 

(2) Reasons for award or cancellation: 

(3) Worksheets evaluations: 

(4) Mailinu list, if used: 
(21 Written justification for waiver or emeraencv 

purchase: 

Tabulation of offers received: 

Copy of purchase order(s): 

Related correspondence: 

Reason(s) for receivina onlv one offer in response to 

a solicitation: 

Negotiated contracts: and 

Reasons for not accepting technical proposals. 
(c) After award of contract all material in the file, except 
confidential information, shall be open to interested persons 
during normal office hours, may be hand copied, or copies v\ ill 
be furnished, furnished in accordance with the Public Records 
Act. 

.Authority G.S. 143B-I0lf: 143-53. 

.1906 APPLICATIONS FOR ADDITION TO 
MAILING LIST (REPEALED) 



L6) 
01 
18] 

LO) 

11 



.4uthorltyG.S. 1438-10(0- 

1907 TERM CONTRACTS 

A copy of e ach curr e nt and e xpir e d t e rm contract ma> b e s ee n 
upon r e qu e st if still r e tained in th e Division of Purchas e and 
Contract or th e Stat e R e cords C e nt e r. 

.4uthorit}G.S I43B-I0(f. 

.1909 CANVASSING BID FILES 

A s ummapi of actions t a k e n in canvassing bids and awarding 
contract s ma> be s ee n upon r e qu e st, if still r e tained in the 
Division of Purcha se and Contract or th e State R e cords C e nt e r. 



SECTION .0200 - LEGAL RECOGNITION OF 
INDIAN GROUPS 

.0202 ORGANIZATIONAL ASSISTANCE 

It is a legislative requirement for the Commission to assist a 
local group to organize and achieve recognition. 

When a group of Indians has identified themselves thev' 
should request organizational assistance from the Commission. 
The Commission will then explain organizational options to this 
group and assist them in developing a representative tribal 
organization. 

.4uthorltvG.S. 143B-406. 



.4uthorit\- G.S. 143B-I()(f). 



ww«www«w 



Notice is hereby given In accordance with G.S. 150B-2I.2 
that the NC State Commission of Indian .4ffairs intends to 
amend rules cited as 1 NC.4C 15 .0202 - .0204. .020' - .0209. 
.0211. .0214: and repeal rule cited as I NC4C 15 .0210. Notice 
of Rule-making Proceedings was published in the Register on 
July 15. 1998. 

Proposed Effective Date: .4pril 1. 1999 

.\ Public Heanno\[ ill be conducted at 10:00 a.m. on November 



.0203 TRIBAL ORGANIZATIONAL OPTIONS 

(a) Each group seekin g recognition shall organize itself as an 
Indian tribe, as defined in 1 NCAC 15 .0208. and shall meet the 
criteria set out in 1 NCAC 15 .0209 and .0211. Methods of 
tribal organization acceptable — 10 recommended by the 
Commission are: 

( 1 ) to organize a priv ate nonprofit corporation under the 
laws of North Carolina, or 

(2) to organize a tribal council council. 

(b) ' '*n^ recognized by tfie Commission, the tribal 
organizai! .n te may represent the group both locallv and at the 
Commission level. 

(c) The type of tribal organization is to be representative and 
give opportunitv for all Indians in the area to be represented. 



640 



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13:8 



PROPOSED RULES 



When more than one group is involved, opportunity shall be 
given for all areas to be represented on either the tribal board of 
directors or the tribal council. 

Aiahorin-G.S. 1438-406. 

.0204 PETITION FOR RECOGNITION 

Once an acceptable method of tribal organization has been 
achieved the group ma\ petition the Commission for recognition. 
The petition shall include name, number, location, origin and 
existing recognition. 

Authority G.S. 143B-406. 

.0207 PROCEDURE FOR RECOGNITION 

The procedure to be followed for recognition will be: 

( 1 ) Petitioner (trib e or organ i zation) subinits a petition as 
set out in Rule .0204 of this Section to the 
Commission of Indian Affairs; 

(2) Commission certifies receipt and explains procedure 
to petitioner: 

(3) With assistance from the Commission, petitioner 
prepares a full application (may take up to one year), 
which is sent to the special committee on recognition; 

(4) Hearing before the special committee on recognition; 

(5) Decision is rendered b\ special committee on 
recognition; 

(6) If petitioner is not satisfied with the decision of the 
special committee on recognition, an appeal ma\ b 
taken to the full Commission; 

(7) The decision by the full Commission will be rendered 
by at least a two-thirds majority' of Indian members; 

(8) If requested, an infomial hearing will be held before 
the full Commission; Th e proc e dur e as s e t out in 
S e ctions .0600 and .0700 of this Chapt e r wi l l b e 
follow e d; 

(9) If the decision is for recognition, the trib e or group is 
recognized as an Indian tribe by the state. If the 
decision is against recognition, petitioner may apply 
to the Office of Administrative Hearings for a formal 
hearing pursuant to G.S. I50B-23. 

Authority G.S. 1438-406: 1508-23. 

.0208 TRIBAL DEFINITION 

A petitioner may appK to be recognized onl\ as an "Indian 
tribe", defined as on e of th e followina: 

(4-) "Indian tribe" is a population of Indian people all 

related to one another by blood, tracing their heritage 
to Indians Indian tribes indigenous to North Carolina 
within the last 200 years. 

f2^ "Indian organizat i on or group" i s a population of 

Indian p e opl e made up of m e mb e rs of s tat e or 
f e d e rally r e cogniz e d Indian trib e s. Nin e ty p e rc e nt of 
th e organization or group must b e Indian. 

Authority G.S. 1438-406. 



.0209 CRITERIA FOR RECOGNITION AS A TRIBE 

(a) The criteria to be used in the decision whether to extend 
official state recognition as a tribe are: 

( 1 ) traditional North Carolina Indian names; 

(2) kinship relationships with other recognized Indian 
tribes; 

(3) official records such as birth, church, school or other 
recognizing the people as Indian; 

(4) letters or statements from state or federal authorities 
recognizing the people as Indian; 

(5) anthropological or historical accounts tied to the 
trib es ' group's Indian ancestry; 

(6) letters or statements from presently recognized tribes 
or groups or their representatives attesting to the 
Indian heritage of the trib e ; group; 

(7) any other documented traditions, customs, legends, 
etc. that signity the trib e s' group's Indian heritage; 

(8) participation in or grants from sources or programs 
designated as for Indian only. 

(b) In addition to the criteria listed in Paragraph (a) of this 
Rule, the following are also relevant to the decision: 

( 1 ) any other material or documents the trib e group may 
v\ ish to present; 

(2) any other material or documents the Commission or 
special committee on recognition may request. 

(c) Five of the recognition criteria listed in Paragraph (a) of 
this Rule must be satisfactorily met to achieve state recognition. 

Author in- G.S 1438-406. 



.0210 CRITERIA FOR RECOGNIT'ON AS A GROUP 
OR ORGANIZATION 

(fl-) To b e r e cogn i z e d as an — Indian group or Indian 

organization, th e p e tition e r must s how that at l e ast 00 p e rc e nt of 
th e ir r e gist e r e d m e mb e rs ar e c e rtifi e d m e mb e r s of r e cogniz e d 
stat e or f e d e ral tr i b es . Th e r e main i ng up to 10 p e rc e nt may b e 
e ith e r m e mb e rs of un r e cogniz e d trib es or non Indians. 

fh) — Inquir i es wi l l be mad e w i th th e nam e d trib e s as to th e 
tribal s tatus of the memb e rs list e d. 



.Authority G.S. 1438-406. 

.0211 RECOGNITION REQUIREMENT 

Only trib e s groups tracing back to Indian tribes indigenous to 
North Carolina at least for the last 200 years will be considered 
for recognition by the Commission. 

.Authority G.S. 1438-406. 

.0214 TRIBAL ROLL 

Each petitioning trib e or organization group must submit to 
the Commission a roll of its members as a condition to 
recognition. The tribal roll should list the names and addresses 
of the people and relate each one to their kinship ties. Fer 
organizations, th e roll should list th e nam e s and addr e ss e s of al l 
m e mb e rs and if Indian, th e r e cogniz e d tribe to which th e p e rson 



13:8 



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641 



PROPOSED RULES 



belong s . Th e se rolls This roll must be submitted prior to the 
recognition decision of the Commission of Indian Affairs. 

AuthoniYGS. 1438-406. 



« w w w w w 



w w « w 



Notice is hereby given in accordance with G.S. I5QB-21.2 
tlhii the Department of Administration intends to amend 
rules cited as 1 \CAC 25 .021! - .0213. .0301 - .0303. .0402. 
.0504 - .0506. .0602 - .0603. .0605. Notice of Rule-making 
Proceedings Mas published in the Register on June 1, 1998. 

Proposed Effective Date: April 1. 1999 

A Public Hearing will be conducted at 10:00 a.m. on Xovember 
9. 199H at the Administration Building. .4dvisory Budget 
Commission Room 5034. 116 West Jones Street. Raleigh. AC 
2-603. 

Reason for Proposed .Action: The Departments of 
Administration and Environment and Natural Resources, in 
conjunction with representatives of local and State government 
and environmental interests, convened the Environmental Policy 
Act Aih-isoiy Committee ("EPAAC") to study the North Carolina 
Environmental Policy Act and to recommend means to make the 
act's implementation more efficient and responsive. These 
amendments are a part ofEPA.AC's recommendations. 

Comment Procedures: All written comments should be made 
to CIvys Baggett. Director State Clearinghouse. 116 West 
Jones Street. Administration Building. Room 5106B. Raleigh. 
NC 2^603-8003. telephone (919) '3 3-' 2 32. e-inail 
chiys_baggett a mail. doa. state, nc. us. 

Fiscal Note: These Rules do not affect the expenditures or 
re\-emies of state or local government funds. These Rules do not 
have a substantial economic impact of at least five million 
dollars (S5. 000. 000) in a 1 2 -month period 

CHAPTER 25 - NORTH CAROLINA 
ENVIRONMENTAL POLICY ACT 

SECTION .0200 - NCEPA 
ADMINISTRATION/ENVIRONMENTAL IMPACT 

.0211 ST.ATE CLEARINGHOUSE 

(a) The Department of Administration shall maintain a 
clearinghouse to coordinate and administer the requirements of 
this Chapter 

(b) Among its responsibilities the Clearinghouse shall: 
recei\e and circulate en\ironmental documents for 
re\ ieu and comment as pro\ ided b\ these Rules: 
forward all written comments generated b\ the re\ iew 
process to the State Project .Agencx and. where 
appropriate, prepare a single integrated letter of 
response; 



(1) 
(2) 



(3) retain a complete record of en\ ironmentai documents. 
re\iew documents, and other substanti\e materials 
related to the operation of the Clearinghouse; 

(4) train review coordinators from within all state 
agencies; and 

(5) coordinate the establishment of minimum criteria and 
ensure that thresholds are consistent among all 
agencies. 

Authorities. 113.4-11. 

.0212 ENVIRONMENTAL BULLETIN 

(a) The Environmental Bulletin will be published twice a 
month b> the Clearinghouse and will contain notice of an\ filing 
with the Department of an\ en\ ironmentai document, request for 
establishment of minimum criteria, or other documents and 
decisions as set out b\ this Chapter 

(b) The Environmental Bulletin shall be made available to all 
review agencies and v\ill be available to local governments, 
institutions, and individuals upon request. 

(c) The Environmental Bulletin is available on the Internet at 
vvwAv.doa. state. nc. us doa clearing ebnet.htm. Notices of 
Availability of documents received for review and comment are 
added dailv to the Environmental Bulletin at this vsebsite. 

Authorit^•G.S. 113A-1 t, lugh 113A-I0. 

.0213 ENVIRONMENTAL POLICY ACT ADVISORY 
COMMITTEE 

(a) The Secretan. of the Department of Administration or a 
person so designated bv the Secretary, shall sene as the Chair of 
the Environmental Policv' Act Adv ison. Committee. 

(b) The purpose of the Committee is to provide technical 
advice to the Secretary of the Department on env ironmentai 
issues related to the NCEPA. 

(c) The Secretary will solicit nominations for the Committee 
from those state departments and other organizations most 
involved in env ironmentai protection. These include but are not 
limited to. the Departments of Cultural Resources. Health and 
Human R e sourc e s. Services. Environm e nt. H e alth. Environment 
and Natural Resources. Justice, and Transportation. From the 
list of nominees, the Secretary shall select the Committee 
members. The Committee shall consist of no less than ftve 
seven or more than ftifH; f3 members. 

Authority- G.S. 113.4-11. 

SECTION .0300 - MINIMUM CRITERIA 

.0301 MINIMUM CRITERIA 

(a) State agencies may choose to establish specific minimum 
criteria designating minimum levels of env ironmentai impact. 
Once these criteria have been approved, no filing of 
env ironmentai documents will be required for projects v\hose 
impacts do not exceed the criteria thresholds. 

IJ3J If an agency establishes minimum criteria, the agencv will 
review the criteria every five years and revise them as necessary . 



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(c) All proposed minimum criteria and revisions to minimum 
criteria shall be approved b\ the Secretars of Administration 
prior to an agency's submission of proposed rules establishing or 
revising such minimum criteria under G.S. 15QB. 

AiithorinG.S. II3A-II. 

.0302 APPROVAL OF CRITERIA 

The following procedures will be used in th e e stablishm e nt to 
gain approval of minimum criteria: 

( 1 ) The agency will prepare a draft list of the minimum 
criteria, describing the ease of measuring the criteria, 
and how the criteria predict the en\ ironmental impact 
of projects. The agency will submit these lists to the 
Clearinghouse for circulation and re\ iew. 

(2 ) Upon receipt of these lists from the agency, the The 
Clearinghouse wiH will: 

(a) solicit v\ritten comments on the criteria from 
interested parties or agencies ha\ ing expertise 
or jurisdiction by law, and will publish a notice 
of the criteria in the Environmental Bulletin. 
The period of review is 30 working calendar 
days from the date of publication in the 
Environmental Bull e tin. Bulletin: and 

(b) re\ iew the criteria to ensure the\ are consistent 
with Department of Administration rules and 
make any necessars recommendations to the 
agency as to consistency. 

(3) Th e Cl e aringhous e v\ ill foryvard all comm e nts on th e 
criteria to the submitting ag»- ' ncy. In addition- 
Clearinghouse staff yv ill r e vi e yv th e crit e ria to e nsur e 
con s ist e nt thr e shold s among ag e nci es and mak e an\ 
n e c e s s ar> r e comm e ndat i ons, ff there are no yvritten 
comments and the criteria are consistent y\ith 
Department of Administration rules, the criteria will 
be approved by the Secretary ot" Administration . 

(4) If th e r e ar e no comm e nt s , the crit e ria wi l l b e approv e d 
by th e S e cr e tary of Administration, ff there are anv 
written comments on the criteria, the Clearinghouse 
will forward all those received to the submitting 
agency. along with any Clearinghouse 
recommendations as to consistency. 

(5) TTie agency will feview consider all written comments 
and decide whether to submit a fifta4 revised list of 
minimum criteria to the Cl e aringhous e . Clearinghouse 
or whether to continue with its original list. 

(a) If the agency submits a revised list, the new list 
of criteria will follovy the same procedure for 
solicitation of comments, publication of notice, 
and consistency review as did the original list. 
This process will be continued until the agency 
decides it no longer wishes to make further 
amendments to its proposed criteria, or until no 
further written comment is received. 

(b) if the agency decides to continue with jts 
original list or no longer wishes to amend jts 
list as provided for m Rule .0302(5)(a) of this 



Section, it will notify' the Clearinghouse of that 
decision. 

(6) The Clearinghouse will recommend to the Secretary 
of Administration approval or rejection of the final 
list of minimum criteria based on the consideration of 
all comments, written comments and the criteria's 
consistency. 

(7) Minimum crit e ria shall b e revi e wed e v e ry fiv e y e ars 
and r e vis e d as n e c e s s ary. The Clearinghouse will 
notify the agency of the Secretary's approval or 
rejection of its proposed final list of minimum criteria. 

Authority G.S. 115.4-11. 

.0303 REVISION OF CRITERIA 

The same process as cited in Rule .0302 of this Section for 
initial adoption of minimum criteria will be followed by agencies 
seeking to revise th e ir those minimum crit e ria as is us e d in th e 
initial adoption, criteria. 

.Authority G.S. 113.4-1 through 113.4-10. 

SECTION .0400 - COMPLIANCE 

.0402 DOCUMENT UNDER NEPA DEEMED 
ADEQUATE 

If an env ironmental document is prepared under the provisions 
of the National Environmental Policy Act (NEPA) for a specific 
activity, and if that, document is reviewed through the 
Clearinghouse process, then this review shall constitute 
compliance with the requirements of this Chapter for that 
activity, ff a specific activity has been designated as 
categorically excluded from the provisions of the National 
Environmental Policy Act, then the requirements of this Chapter 
shall have been met for that activity. 

Authority G.S. 113A-I through 113.4-10. 

SECTION .0500 - ENVIRONMENTAL ASSESSMENT 

.0504 INTERNAL REVIEW 

(a) Once an EA is prepared, the State Project Agency must 
decide if it is satisfied as to the completeness of its assessment. 
If no significant environmental impacts are predicted, the agency 
may then submit both the EA and FONSl to the Clearinghouse 
for review. 

(b) The agency mav choose to submit only the EA and use the 
comments, if anv. to determine how to proceed. If an agency 
chooses this procedure, the review process for the EA shall be 
the same as Rule .0506 of this Section for both r e vi e ws, review 
of an EA or a FONSl. If an agency proceeds y\ith an 
Environmental Impact Statement, then the review process shall 
be the same as that in Section .0600 of this Chapter. 

Authority G.S. 113.4-11. 

.0505 CONTENT OF FONSl 



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A FONSl shall contain the following information: 

( 1 ) a brief nan-ati\e description of the proposed activit>' 
including a description of the area affected by the 
proposed act ivit> acti\it\ and a site location map. 
w here appropriate: 

(2) a list of probable en\ironmental impacts of the 
proposed activit\: 

(3) a list of the reason(s) for concluding that the action 
will not ha\e a significant adverse effect on the 
qualit> of the en\ironment. with reference to any 
mitigation acti\ ities to be carried out. thereb\ negating 
the necessit\ of preparation of an EIS; 

(4) a statement that no EIS is to be prepared and that the 
FONSl completes the en\ ironmental re\ iew record 
which is available for inspection at the Clearinghouse. 

Aiahorih-G.S. lBA-11. 

.0506 REMEW PROCESS 

(a) The State Project Agenc_\ must submit 16 copies of the 
EA and FONSl to the Cl e aringhous e . Clearinghouse, and any 
additional copies as may be requested. The Clearinghouse will 
circulate these documents to state and local officials to obtain 
comments and will publish a Notice of Availability in the 
Environmental Bulletin. In order to h ave a Notice of 
Availabilit^ published in the Environmental Bulletin, the 
documents must be submitted to the Clearinghouse no later than 
noon on the Friday preceding the publication date of the 
Bulletin. Reading copies will be made available at the 
Clearinghouse for anv interested parties. The review period is 
30 vsorking calendar davs after publication in the bull e tin. 
Bulletin. 

(b) Each rev lew ing agencv and an\ interested parrv ma> make 
comments on the adequacy of the documents. 

(c) Based on consideration of the comments submitted, the 
Clearinghouse w ill advise the state project agencv as follow s: 

( 1 ) the document has been determined to lack sufficient 
information. Supplemental documentation which 
provides adequate information should be submitted to 
the Clearinghouse for review and comment; 

(2) the document does not satisfy a finding of no 
significant impact and an EIS should be prepared; 

(3) the document is adequate and the next appropriate 
lev el document should be prepared for rev lew ; or 

(4) the document is adequate and completes the review 
process requirements for the act. 

(d) The State Project Agencv mav adopt or reject the 
Clearinghouse's recommendation. 

(e) No administrative or judicial review is permitted unless 
undertaken in connection with review of the agencv action. No 
other rev lew of an env ironmental document is pemiirted. 

Auihority G.S. 113A-11. 

SECTION .0600 - ENVIRONMENTAL IMPACT 
ST.^TEMENTS 



.0602 SCOPING 

If an agency determines that an EIS is required on a project, i 
it mav choose to request advice from the general public and ' 
other agencies on what alternatives and issues should be 
addressed in the EIS. The agencv ma^ — r e quest — the 
Cl e aringhouse to must submit a copy of a scoping notice to the 
Clearinghouse, which will publish a tfie scoping notice in the 
Environmental Bulletin. The comment period js 30 calendar 
days after publication in the Bulletin. 

Auihority G.S. 113.4-1 through 115A-10. 

.0603 FORMAT AND CONTENT 

Agencies shall use a fonnat for EIS's which will encourage 
good analysis and clear presentation of all alternatives, including 
the proposed activ itv while minimizing length and complexity. 
These documents shall not exceed 60 pages and shall include 8 
'2" X JJ_^ site location maps. The document shall include the 
following: 

(1) A single cover sheet including the following 
information: 

(a) designation of the document as a draft, 
supplementary or final statement; 

(b) title of the proposed activ ity that is the subject 
of the statement; 

(c; list of any involved cooperating agencies; and 

(d) name, address, and telephone number of the ^ 

person in the State Project Agencv who can § 

supply further information. 

(2) An accurate summary of the statement stressing the 
major conclusions, areas of controversy-, and issues to 
be resolved. The summary shall also list all federal, 
state, and local permits, licenses, certifications, and 
other approvals which must be obtained in 
implementing the proposal. If there is anv uncertainty 
about whether any one of these is necessary, it should 
be so indicated. 

(3) Purpose and Need. The underlying purpose and need 
being responded to by- the proposed activ ity. 

(4) Alternatives including proposed activ itv. Based upon 
information and analysis presented in Items (5) 
through (8) of this Rule on the affected environment 
and environmental consequences, the agency shall 
present the env ironmental impacts of the alternatives 
including the proposed activity- in comparative form. 
To the extent possible the comparison of alternatives 
shall quantity how the purpose and need v\ould be 
satisfied bv each alternative and the proposed activ ity . 
This section of the document is the heart of the EIS. 
sharply defining the issues and providing a clear basis 
for choice among options by decision makers and the 
public. It shall also: 

(a) explore and evaluate all reasonable 
alternatives, including those not within the | 
jurisdiction of the State Project Agencv and the 
alternative of no action: 

(b) discuss the reasons for the elimination of 



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alternatives from detailed study; 

(c) identify the agency's preferred altemative(s) in 
the draft statement and identify such 
alternatives in the final statement, unless 
another law prohibits the expression of such a 
preference: 

(d) include appropriate mitigation measures not 
already included in the alternatives; and 

(e) assess the social and economic impacts of each 
alternative. Impacts shall be quantified for 
each alternative, where feasible, but when 
quantification b\ standard economic tools is 
not feasible or intangibles are involved, a 
description of each impact is required. 

(5) Affected Environment. The EIS must describe the 
environment of the area(s) to be affected and the 
environment to be created b\ the alternatives under 
consideration. The description shall be no longer than 
is necessar\ to understand the effects of the 
alternatives. Data and analysis in a statement shall be 
commensurate with the importance of the impact, with 
less important material summarized, consolidated, or 
simply referenced. 

(6) Environmental Consequences. This section of the 
document forms the scientific and anal\1ic basis for 
the comparisons under Item (4) of this Rule. It 
includes: 

(a) direct effects and significance; 
indirect effects and significance; 
cumulative effects and significance; 
the relationship between the short-term uses of 
the environment involved in the proposed 
action and the maintenance and enhancement 
of long-term productivity ; 
any irreversible and irretrievable environmental 
changes which would be in\olved in the 
proposed action should it be implemented; and 
possible conflicts between the proposed 
acti\ities and the objectives of federal, state, 
and local plans, policies, and controls for the 
affected area. 

(7) List of Preparers. The EIS shall list the names and 
qualifications of the persons who were primarily 
responsible for preparing the EIS. 

(8) Appendi.x. If an appendix is included in an EIS. it 
shall meet the follow ing requirements: 

(a) consist of materials substantiating an\ anaKsis 
fundamental to the principal document, as 
distinct from material of lesser significance that 
ma\ accompany the document or be 
incorporated by reference; 

(b) normally be analytic and relevant to the 
decision to be made; 

(c) not be counted in the EIS 60 page limit; and 

(d) be circulated with the EIS or be readily 
available upon request. 



(b) 
(c) 
(d) 



(e) 



(f) 



Authority (J. S. 113.4-11. 

.0605 REVIEW PROCESS 

(a) Draft EIS. This document Sixteen copies and any 
additional copies as may be requested shall be submitted by the 
State Project Agency and circulated for comment by the 
Clearinghouse as set out in Rule .0506 of this Chapter A Notice 
of th e availabilify Availabilit\- of the EIS shall be printed in the 
Environmental Bulletin, and a 45 calendar-day period of review 
after this notice is published shall be allowed. 

(b) The Clearinghouse will forward copies of all comments 
made b\ reviewers to the State Project Agency for incorporation 
in the final document. 

(c) Final EIS. The State Project Agenc> shall submit 16 
copies of the final EIS and anv additional copies as may be 
requested to the Clearinghouse. These documents shall be 
circulated to the original reviewers for a final review. Notice 
shall also be given in the Environmental Bulletin. Thirty 
calendar days after publication of the bull e tin Bulletin shall be 
allowed for final review. 

(d) Based on consideration of the comments submitted, the 
Clearinghouse will advise the state project agency as follows: 

(1 ) the document has been determined to lack sufficient 
information. Supplemental documentation which 
provides adequate infomiation should be submitted to 
the Clearinghouse for review and comment; 

(2) a final EIS should be prepared for review addressing 
the comments submitted; or 

(3) the document is adequate and complete;- the review 
process requirements for the act. 

(e) The State Project Agency may adopt or reject the 
Clearinghouse's recommendation. 

if) No administrative or Judicial review is permitted unless 
undertaken in connection with review of the agency action. No 
other review of an environmental document is permitted. 

.AuthormG.S. 113.4-11. 



Notice is hereby given in accordance with G.S. 150B-21.2 
that the State Building Commission intends to amend rule 
cited as 1 NCAC 30F .0305. Notice of Rule-making 
Proceedings was published in the Register on August 14. 1998. 

Proposed Effective Date: April 1. 1999 

A Public Hearing will he conducted at 10:00 a.m. on November 
1 ". 1 998 at the Education Building. State Construction Office. 
Suite -450. 301 North liilmington Street. Raleigh. NC 27603. 

Reason for Proposed Action: This proposal was requested by 
members of the State Building Commission who had expressed 
concern that the present rules have no intermediate action in 
cases where some doubts are raised in the contractor evaluation 
process. This proposal allows the Commission to provide a 



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645 



PROPOSED RULES 



warning to the contractor rather than Jiscjualif}' the contractor 
whatsoever. Under the present procedures, if the panel finds 
thai the contractor should be removed from pre-hid 
disqualification, the records are purged and the contractor 
starts out with a new record. Under the proposed revision, the 
records would he retained. 

Comment Procedures: All written comments should he made 
to Dan R. Murray. State Construction Office. 301 North 
Wilmington Street. Education Building. Suite 450. Raleigh, NC 
2''601-282', telephone 1919) ~33-'962. e-mail 
Dan_Murray a i7iail.doa.state.nc.us. 

Fiscal Note: This Rule does not affect the expenditures or 
revenues of state or local government funds. This Rule does not 
have a substantial economic impact of at least five million 
dollars (35.000.(100) in a 12-month period. 

CHAPTER 30 - STATE CONSTRUCTION 

SUBCHAPTER 30F - STATE BUILDING 

COMMISSION CONTRACTOR EVALUATION 

PROCEDURES 

SECTION .0300 - EVALUATION OF CONTRACTORS 

.0305 EVALUATION REVIEW 

(a) SCO will be responsible for maintaining contractor 
evaluation data. This data shall be maintained on an indi\ idual 
Job basis, and shall also be maintained cumulativelv b\ 
contractor (based on contractor license number). 

(b) The data maintained b\ the SCO will reflect perfonnance 
histor} for a period of tl\e \ears. All evaluation data on 
completed projects over five \ears old will be removed from 
SCO tiles and will not be used as a factor in the cumulati\e 
evaluation. 

(c) A contractor's contractor whose cumulati\e evaluation 
which falls below a mark of 3.5 will be detennined to have 
provided an unsatisfactory level of performance and ma\ not be 
allowed to bid on or ser\e as a sub-contractor on State capital 
improvement projects during a corrective period. All references 
to pre-bid disqualification status in this Section shall also be 
considered to appK to disqualification of a prime contractor to 
serve as a sub-contractor on State capital improvement projects 
during the disqualification period. 

(d) To be utilized for pre-bid disqualification, a prime 
contractor's cumulative evaluation must be based on a minimum 
of three evaluations on at least three separate capital projects. 
Further, if a contractor is assigned a single final evaluation of 
2.5 or lower, this action alone shall be sufficient to call the 
contractor's performance into question r e sulting and ma\ result 
in pre-bid disqualification during a corrective period. 

(e) In both instances, i.e.. a cumulative mark falling below 3.5 
or a single evaluation of 2.5 or lower, the SCO shall convene a 
panel of five persons to review the evaluation and mad e make a 
recommendation to the &&€ — for disqualification — of the 
contractor for bidding. SBC. (A single final evaluation of 2.5 or 



lower, when applied to the cumulative total, will not initiate 
further immediate review |f ]t causes the cumulative rating to fall 
below 3.5.) The panel shall consist of three d e sign/ construction 
design/construction professional State employees of which a 
minimum of one emplovee shall be a licensed architect or 
engineer as appointed by the Director of State Construction and 
two members of the SBC as appointed by the Chairman of the 
Commission of which a minimum of one shall be a licensed 
contractor. 

(f) The panel may recommend to the State Building 
Commission either of the following actions as a result of jts 
review: 

( 1 ) disqualification of the contractor from bidding and 
placement of the contractor jn a pre-bid 
disqualification status for a corrective period ot" two 
years: 

(2) rejection of disqualification but issuance of a warning 
to the contractor that continued poor performance mav 
result in disqualification. 

The SCO will retain file copies of the ratings, disqualifications 
and warnings. 

ff) ig} In all instances, notification of a contractor hav ing 
been assigned to a pre-bid disqualification status or having been 
issued a warning shall be bv the Chaiiman of the State Building 
C-immission and onlv then after review and approval bv the 
Ct. ■'mission of the disqualification or warning action. 

(g) [h] The normal disqualification as approved bv the 
Commission shall be for a period of tvvo years. The two-year 
period is intended to prov ide opportunity for a contractor to 
implement significant corrective action to improve performance. 
At the completion of the tvvo-vear period, the prime contractor 
can make application for reinstatement to the qualified bidders 
list: reinstatement will be subject to action by the SBC. If the 
SBC approves reinstatement, the contractor's pre-bid 
disqualification will be removed, thus allowing the contractor to 
bid. 

{h) tij Removal of a contractor from the pre-bid 
disqualification status, upon approval bv the SBC. will involve 
deletion of all evaluations from the State Construction Office's 
records. 

(4) IjJ If a contractor has been removed from the qualified 
bidders list bv virtue of accumulated evaluations falling below 
3.5 and routine removal of five-vear old evaluations causes the 
contractor to achiev e an ov erall evaluation score of 3.5 or higher, 
the contractor will not be automaticallv reinstated to the 
qualified bidders list but rather must remain in a disqualified 
status for a total of tvvo vears w ith reinstatement considered bv 
the SBC as outlined in this Rule. If after the tvvo-vear corrective 
period the SBC does not approve removal of a contractor from 
the pre-bid disqualification status, the prime contractor vs ill be 
allowed the opportunity to reapply after a period of 12 months 
and annually thereafter until the pre-bid disqualification status 
is removed. 

(j-) [kj Lists of all contractors who are in a pre-bid 
disqualification status will be maintained bv the SCO. Prior to 
bid opening, the project designer will be responsible for 
obtaining from the SCO a list of those contractors in a pre-bid 



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PROPOSED RULES 



disqualification status and shall ensure that no bids for State 
capitil impro\'om e nts improvement projects will be read from a 
contractor in such status. 

Aiahorin- G.S. 145-135.2614). 



w w w w 



Notice is hereby given in accordance with G.S. 150B-21.2 
ihui the Department of .Admini.stration intends to amend 
rules cited as 1 NCAC 35 .0101. .0103. .0202. .0205. .0304. 
. 0308. Notice of Rule-making Proceedings was publislied in the 
Register on August 14. 1998. 

Proposed Effective Date: .April I. 1999 

A Public Hearing will be conducted at 10:00 a.m. on November 
18. 1998 at the .Administration Building. Governor's Press 
Conference Room. P' Floor 116 West Joties Street. Raleigh. 
NC. 

Reason for Proposed Action: The Campaign has grown 
greatly in recent years and many charitable organizations wish 
10 pariicipale in the campaign. More detailed application 
procedures have become necessary, and clearer definition of 
local responsibilities are now desirable. Small organizations 
needed flexibility in providing financial information, which is set 
out in the proposed rules, along with technical changes. 

Comment Procedures: .All written comments should be made 
to P. Glen Peterson. General Counsel, Department of 
Adt.iinistration. 116 West Jones Street. Raleigh. NC 2^603- 
8003. telephone (919) '33-'232. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of slate or local government funds. These Rules do not 
have a substantial economic impact of at least five million 
dollars I S5. 000.000) in a 12-month period. 

CHAPTER 35 - STATE EMPLOYEES COMBINED 
CAMPAIGN 

SECTION .0100 - PURPOSE AND ORGANIZATION 

.0101 DEFINITIONS 

For purposes of this Chapter, the following definitions apply: 

(1) "Charitable organization." A non-partisan 
organization that is tax-exempt for both the IRS and 
NC tax purposes. The organization must receive 
contributions that are tax deductible b\ the donor. 

(2) "Audit" or "audited financial statement." An 
examination of financial statements of an organization 
b\ a CPA, conducted in accordance v\ith generalK' 
accepted auditing standards, to detemiine whether, in 
the CPA's opinion, the statements conform with 
generally accepted accounting principles or, if 



(3) 



(4) 



(5) 



(6) 



(V) 



(8) 



(")) 



applicable, v\'ith another comprehensive basis of 
accounting. 

"State Emplovees Combined Campaign" or "SECC." 
The official name of the state employees charitable 
fund-raising drive. 

"Federation" or "Federated Group" means a group of 
voluntar) charitable human health and welfare 
agencies organized for purposes of suppKing 
common fund-raising. administrative. and 
management services to its constituent members. 
"Fund-raising expenses" (supporting activities) means 
expenses of all activ ities that constitute, or are an 
integral and inseparable part of. an appeal for 
financial support. Fund-raising expenses represent 
the total expenses incurred in soliciting contributions, 
gifts, grants, etc.: participating in federated fund- 
raising campaigns; maintaining donor mailing lists; 
preparing and distributing fund-raising manuals, 
instructions and other materials; and conducting other 
activ ities involved with soliciting contributions. 
"Administrative expenses" (supporting activities) 
means expenses for reporting and informational 
activities related to business management and 
administrative activities v\ hich are neither educational, 
nor direct conduct of program services, nor fund- 
raising services. 

"Program service expenses" means expenses for those 
activities that the reporting organization was created 
to conduct which fulfill the purpose or mission for 
v\hich the organization exists, exclusive of fund- 
raising and administrative expenses, and which, along 
w ith anv activ ities commenced subsequentiv', form the 
basis of the organization's cun-ent exemption from tax. 
"Fund-raising consultant" means anv person v\ho 
meets all of the following: 

(a) is retained by a charitable organization or 
sponsor for a fixed fee or rate under a written 
agreement to plan, manage, conduct, consult, 
or prepare material for the solicitation of 
contributions in this State; 

(b) Does not solicit contributions or emplov, 
procure, or engage any person to solicit 
contributions; and 

(c) Does not at anv time have custody or control of 
contributions. 

"Fund-raising solicitor" means any person who is not 
a fund-raising consultant and does either of the 
follow ing for compensation: 

(a) Performs an\ service. including the 
employment or engagement of other persons or 
services, to solicit contributions for a charitable 
organization or sponsor; or 

(b) Plans, conducts, manages, consults, vshether 
directly or indirectly, in connection with the 
solicitation of contributions for a charitable 
organization or sponsor. 

"Review" or "reviewed financial statement." An 



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647 



PROPOSED RULES 



examination of financial statements of an organization 
b\ a CPA. The CPA performs inquir\ and anal\ticai 
procedures that provide the CPA with a reasonable 
basis for expressing limited assurance that there are 
no material modifications that should be made to the 
statements in order for them to be m con form it\ with 
ueneralK accepted accounting principles or. jf 
applicable, with another comprehensive basis of 
accounting. 

AiilhorinGS. 1-13-3.3: 143B-10. 

.0103 ORGANIZATION OF THE CAMPAIGN 

The State Emplo\ees Combined Campaign is organized as 
follows: 

( 1 ) Chair. Each Near the Governor ma\ appoint a 
Statewide Combined Campaign Chair from one of the 
Executive Cabinet. Council of State. S\stem of 
Communit\ Colleges, or Universit\ Administration 
agencies. The Campaign Chair or the Campaign 
Chair's designee shall serve as director of the 
campaign. The responsibilities of the Chair include 
setting the dates and approving the published 
materials for the Combined Campaign, contracting for 
the Statew ide Campaign Organization, and appointing 
and serving as chair of the SECC Adv. ^v^ 
Committee. For the purposes of selecting a Statewide 
Campaign Organization, the Statewide Combined 
Campaign Chair will consider the following criteria: 

(a) The organization must have demonstrated 
abilirv to manage large-scale fund-raising 
campaigns. 

(b) The organization must have the abilit) and 
willingness to work with a statew ide svstem of 
local organizations capable of effectively 
managing local combined campaigns and 
relating to the Statewide Campaign 
Organization. 

(c) The organization must have an audit to 
demonstrate acceptable financial 
accountability.. 

(d) The organization must be a tax-exempt 
organization under the Internal Revenue Code. 

(e) The organization must be willing and able, if 
required, to provide a bond in an amount 
satisfacton. to the SECC Adv isor> Committee 
to protect the participant organizations and 
donors, contributors. 

(2) SECC Advisor> Committee. This ongoing committee 
serves as a central application point for all charitable 
organizations applving to participate in the SECC. 
The Committee recommends overall policv for the 
campaign to the Gov emor. the Statew ide Campaign 
Chair, and necessan. state agencies and recommends 
the criteria for participation bv charitable 
organizations. The Committee reviews the 
recommendations made bv the Statew ide Campaign 



(3) 



(4) 



Organization and accepts or rejects its 
recommendations. The Committee may. in its 
discretion, require the Statewide Campaign 
Organization to provide a bond, as prov ided in Sub- 
item ( I )(e) of this Rule. The Committee is composed 
of at least 10 state emplovee members appointed bv 
the Statev\ ide Campaign Chair Members ser\ e three- 
vear staggered terms at the pleasure of the Statewide 
Campaign Chair. If a vacancv occurs, the Slatevside 
Campaign Chair shall appoint a replacement to fill the 
unexpired term. An\ member mav be reappointed at 
the end of his or her term. 

Statewide Campaign Organization. The Statewide 
Campaign Organization shall be selected b\ the 
Statevside Campaign Chair. The duties of the 
Statew ide Organization include, but are not limited to. 
the follow ing: 

(a) serv ing as the financial administrator of the 
SECC? 

(b) detennining if the applicant agencies meet the 
requirements of Rule .0202 of this Chapter; 

(c) submitting to the Statewide Campaign Chair 
the name of an organization to serve as Local 
Campaign Organization: 

(d) providing the necessarv supervision of data 
processing services in order to process all 
payroll deduction pledge fornis of state 
emplo>ees: 

(e) receiving reports from the Local Campaign 
Organization; 

(f) transmitting to each Local Campaign 
Organization its share of the state empIo>ees 
pavroll deduction funds; 

(g) printing and distributing the pledge form, the 
campaign report form and collection envelopes 
to the Local Campaign Organization; 

(h) maintaining an accounting of all funds raised 
and submitting an interim unaudited end-of- 
campaign report of the following: 
(i) amounts contributed and pledged; 
(ii) number of contributions; and 
(iii) amounts distributed to each participating 
agencv; 
(i) Once applications for acceptance into the 
campaign have been recommended to the 
SECC Advisor> Committee bv the Statev\ide 
Campaign Organization, preparing a list of all 
accepted organizations and distributing them to 
all applicants, applicants; 
(i) coordinating an annual statewide or regional 
training session for Local Campaign 
Organizations and state emplovee volunteers; 
(k) serving as liaison to participating charitable 

organizations. 
Local Campaign Chair. The Governor, if asked by the 
local charitable organizations accepted into the 
Combined Campaign, mav appoint an area 



648 



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October 15, 1998 



13:8 



PROPOSED RULES 



representative from either state government or the 

University of North Crroiina system to serve as the 

Local Chair. This person will be responsible for 

forming a Local Advisory Committee for recruitment 

of volunteer state employees, employees, confirming 

to p management support, communicating to area state 

employees the Chair's support for and participation in 

the campaign, and providing that the campaign is 

conducted using the knowledge and expertise of the 

SECC to insure success. The Local Advisory 

Committee is responsible for the approval of local 

campaign lit e ratur e , review of past performance, the 

establishment of local goals as needed, a^ the 

distribution of an\ undesignated funds made available 

for di s tribution, distribution, the development of a 

budget and campaign plan, the approval of local 

publicity materials, the conduct of the campaign, and 

the recognition of volunteers and contributors. 

(5) The Campaign Chair shall approve or reject the State 

Campaign Organization's recommendation for Local 

Campaign Organization and name an agency as the 

Local Campaign Organization. The Local Campaign 

Organization must identify itself on all printed 

materials as the local SECC organization. 

(a) Any SECC charitable organization wishing to 

be selected as a Local Campaign Organization 

must submit a timeK application in accordance 

with the deadline set by the Statewide 

Campaign Organization that includes: 

(i) A written campaign plan sufficient jn 

detail to a llow the SCO to determine if 

the applicant could administer an 

efficient and effective SECC. The 

campaign plan must include a proposed 

SECC budget that details al] estimated 

costs required to operate the SECC. 

The budget ma\ not be based on the 

percentage of funds raised in the local 

campaign. 

(ii) A statement signed by the applicant's 

director or equivalent pledging to: 

(A) administer the SECC fairly and 
equitably. 

(B) conduct campaign operations 
(such as training, kick-off and 
other events) and fiscal 
operations (such as banking, 
auditing. reporting and 
distribution) separate from the 
applicant's non-SECC operations. 
and 

(C) abide by the directions, decisions 
and supervision of the Statewide 
Campaign Organization. State 
Advisory Committee and the 
Local Campaign Advisory 
Committee. 



(a) 



tfe) 



campaign 



of campaign 



of volunteer 



(iii) A statement signed by the applicant's 
director or equivalent acknowledging 
that applicant js subject to the 
provisions of Title Jj Chapter 35. North 
Carolina Administrative Code. State 
Employees Combined Campaign. 

(b) For the purpose of selecting a Local 
Campaign Organization, the Statewide 
Campaign Chair and Statewide Campaign 
Organization will consider the following 
criteria: 

(i) whether the local organization is willing 

to conduct a local SECC; 
(ii) whether the organization agrees to 

comply with the temis of the State/Local 

Organizations contract; 
(iii) whether the organization has community 

and state employee support and 

volunteer involvement; 
(iv) whether the organization has a 

demonstrated ability and successful 

history of managing fund-raising 

campaigns that include: 

(A) development of 
strategy; 

(B) development 
materials; 

(C) development 
campaign structures; 

(D) training of volunteer solicitors; 

(E) a financial structure and 
resources that can efficiently 
manage, account for. and 
disburse funds; 

(F) being a participant organization 
of the campaign; 

(G) ability to develop financial 
relationships with a network of 
statewide organizations so as to 
ensure the orderly transmittal, 
disbursement, accounting of and 
reporting of donations and 
pledges; 

(v) whether the organization is willing and 
able to provide a bond, if required, in an 
amount satisfactory to the SECC 
Advisory Committee to protect the 
participant organizations and donors. 
contributors. 

(c) The Local Campaign Organization shall 
assist the Local Campaign Chair and Local 
Campaign Advisory Committee in the training 
of volunteers, the ordering printing and 
distribution of campaign literature, the 
collection of pledge reports and envelopes 
from the state agency volunteers, the 
development of campaign reports, and the 



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October 15, 1998 



649 



PROPOSED RULES 



(e^ 



forwarding of one cop\ of each pa\roll 

deduction pledge to the Statew ide Campaign 

Organization. In addition, an end of campaign 

report shall be sent to the Statewide Campaign 

Organization b\ Februar} I following the close 

of the campaign on December 3 1 for inclusion 

in the required fiscal reports. 

(d) Thu Local Campaign Organization shall: 

(i) e'. iabli s h consider establishing an 

interest-bearing account w ith a bank in 

order to recei\e deposits of collected 

funds. Interest earnings shall be 

disbursed to each participating 

federation and independent agencx 

based on its proportionate share of the 

campaign's total gross contributions; 

contributions if an interest-bearing 



account is established: 



(ii) 



distribute the funds from the 

contributions in accordance with 

designations made b\ state emplo\ees. 

Undesignated funds shall be distributed 

in accordance with the rules in this 

Chapter. Each Local Campaign 

Organization sha'' distribute 

contributions quarterl) "i participating 

federations and independent agencies: 

be permitted to deduct, before an> 

disbursements are made, direct costs of 

operating the campaign from the gross 

contributions, and shall charge each 

federation or independent agenc\ its 

proportionate share of the campaign's 

operational cost. The Local Campaign 

Organization shall justifS the actual 

costs of the campaign, which should not 

exceed 10°o of gross receipts: and 

notifv the federations and independent 

agencies no later than March 1 

following the close of the campaign on 

December 3 I of the amounts designated 

them and their member agencies and of 

the amounts of the undesignated funds 

allocated to them. 

(6) A contract between the state and the Statewide 

Campaign Organization, and the Statew ide and Local 

Campaign Organizations, will be executed in order to 

de\elop an acceptable audit trail. The contracts will 

allow a reasonable charge for campaign expenses to 

be claimed b\ the Statewide Campaign Organization 

and the Local Organization. All terms and conditions 

of these contracts are subject to re\ iew and appro\al 

b\ the Statew ide Campaign Chair. 

(a) The Statewide Campaign Organization and 

Local Campaign Organizations shall reco\er 

from gross receipts of the campaign their 

expenses, which should reflect the actual costs 



(i\) 



of administering the campaign. Actual costs of 
the campaign must be justified and should not 
exceed lO^o of gross receipts. The campaign 
expenses shall be shared proportionately by all 
the recipient organizations reflecting their 
percentage share of gross campaign receipts, 
(b) The failure of the Statewide Campaign 
Organization or the Local Campaign 
Organization to perform an\ of its respecti\e 
responsibilities listed in this Section ma\ be 
grounds for remo\al and disqualification b> the 
Chair to ser\e in its capacir\ for one _\ear. 
Before deciding on remo\ ing or disqualifying 
an organization, the Chair shall gi\e the 
organization an opportunit) to respond to an\ 
allegations of failure to perform its 
responsibilities. The organization must submit 
its response to the Chair within 10 da_\s from 
notification postmark date. The Chair shall 
issue a written determination based on a re\ iew 
of all of the infomiation submitted. 

AiiihohnGS. 143-3.3: 143B-III. 



SECTION .0200 



APPLICATION PROCESS AND 
SCHEDLLE 



.0202 CONTENT OF APPLICATIONS 

(a) All organizations seeking inclusion in the State Emplo\ees 
Combined Campaign must submit an application to the state 
campaign. The application must include a completed State 
Employees Combined Campaign Certificate of Compliance. 
pro\ ided bs the Statewide Campaign Organization. Included in 
or attached to the Certificate ot . ompliance must be: 

(1) A letter from the board of directors requesting 
inclusion in the campaign. 

(2) A complete description of ser\ices pro\ided the 
ser\ice area of the organization, and the percentage of 
its total support and re\enue that is allocated to 
administration and fund-raising. 

(3) The most recent audited financial statement prepared 
b\ a CRA within the past two \ears. The SECC 
Ad\isor\ Committee shall pemiit organizations with 
annual budgets of less than three hundred thousand 
dollars (S300.000 1 total support and re\enue to submit 
an audited financial statement or re\iew prepared by 
a CP.A. Total support and re\enue js determined by 
the IRS Form 990 co\ering the organization's most 
recent fiscal \ear ending not more than two years 
prior to the current \ ear's campaign date. The \ear- 
end of such audited financial statement or review 
must be no earlier than tw o \ ears prior to the current 
year's campaign date. The SECC Ad\isop. 
Committee ma\ grant an exception to this requirement 
if an organization has filed its Articles of 
Incorporation with the Secretar\ of State's Office 
since March 1 of the preceding \ear of the current 



650 



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October L\ 1998 



13:8 



PROPOSED RULES 



campaign. 

(4) A signed cop\ of the organization's IRS 990 foirn, 
regardless of whether or not the IRS requires the 
organization to fUe this form, er — s uffic ie nt (3) 
docum e ntation to indicate program services, 
administrative and fund-raising expenses. The IRS 

990 forni and CPA audit or review shall cover the 
same tiscal year and, if revenue and expenses on the 
two documents differ, these amounts must be 
reconciled on an accompans ing statement by the CPA 
who completed the financial audit or review. 

(5) A board statement of assurance of non-discrimination 
of employment, board membership and client 
services. 

(6) A description of the origin, purpose and structure of 
the organization. 

(7) A list of the current members of the board, including 
their addresses. 

(8) A letter from the board of directors certifying 
compliance with the eligibility standards listed in (4) 
Paragraph (b) of this Rule. 

(9) When a federated fund-raising organization submits 
an application. the> ma\ submit the credentials of the 
federation onl>. not each member agenc>. By the 
submission of such, the federations certily that all of 
their member agencies comply with all the SECC 
regulations, unless there are exceptions. If there are 
exceptions to the requirements, the federations must 
disclose such and explain to the satisfaction of the 
Statew ide Combined Campaign Ad\ isorv Committee 

the reasons for the exception. The SECC Advisor' (5) 

Committee may elect to review, accept or reject t'le 
certifications of the eligibilit\ of the member agencies 
of the federations. If the Committee requests 
information supporting a certification of eligibility, 
that information shall be furnished promptK. Failure (6) 

to furnish such information within 10 days of the 
notification postmark date constitutes grounds for the (7) 

denial of eligibilit\ of that member agency. 
( 1 0) The SECC Advisory Committee may elect to decertify 
a federation or independent agency which makes a 
false certification, subject to the requirement that any (8) 

federation or independent agencN that the Committee 
proposes to decertify shall be notified by the 
Statewide Campaign Organization of the Committee's 
decision stating the grounds for decertification. The 
federation or independent agenc\ may file an appeal (9) 

to the Committee within 10 days of the notification 
postmark date. False certifications are presumed to be 
deliberate. The presumption ma\ be overcome by 
evidence presented at the appeal hearing, 
(b) Organizations must meet the following criteria to be 
accepted as participants in the Combined Campaign: 

( 1 ) Must be licensed to solicit funds in North Carolina if 
a license is required b> law. 

(2) Must provide written proof of tax exempt status for 
both federal and NC tax purposes. Organizations 



must certifs that contributions from state employees 
are tax deductible by the donor contributor under NC 
and federal law. 

Must prepare and make available to the general public 
an audited financial stat e ment, statement prepared by 
a CPA within the past two \ears. The SECC 
Advisors Committee shall permit organizations with 
annual budgets of less than three hundred thousand 
dollars (S300.000) total support and revenue to submit 
an audited financial statement or review prepared by 
a CPA. Total support and revenue js detennined by 
the IRS 990 form covering the organization's most 
recent fiscal \ear ending not more than two Nears 
prior to the current \ ear's campaign date. The SECC 
Advisory Committee may grant an exception to this 
requirement if an organization has filed its Articles of 
Incorporation with the Secretary of State's Office 
since March 1 of the preceding year of the current 
campaign. 

If fund-raising and administrative expenses are in 
excess of 25 percent of total revenue, must 
demonstrate to the satisfaction of the SECC that those 
expenses for this purpose are reasonable under all the 
circumstances of the case. The SECC ma>' reject any 
application from an agency with fund-raising and 
administrative expenses in excess of 25 percent of 
total revenue, unless the agency demonstrates to the 
satisfaction of the Committee that its actual expenses 
for those purposes are reasonable under all the 
circumstances in its case. 

Must certify that all publicity and promotional 
activities are truthful and non-deceptive and that all 
material provided to the SECC is truthful, non- 
deceptive, includes all material facts, and makes no 
exaggerated or misleading claims. 
Must agree to maintain the confidentiality of the 
contributor list. 

Must permit no pa\ments of commissions, kickbacks, 
finders fees, percentages, bonuses, or overrides for 
fund-raising, and permit no paid solicitations by a 
fund-raising consultant or solicitor in the SECC. 
Must have a policy of non-discrimination on the basis 
of race, color, religion, sex, age, national origin or 
physical or mental disability for clients of the agency, 
employees of the agency and members of the 
governing board. 

Must provide benefits or services to state employees 
or their families within a solicitation area. Examples 
of services include: 

(A) research and education in the health and 
welfare or education fields; 

(B) family and child care services; 

(C) protective services for children and adults; 

(D) services for children and adults in foster care; 

(E) services related to the management and 
maintenance of the home; 

(F) da\ care services for adults and children; 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



651 



PROPOSED RILES 



(G) transportation ser\ ices, information referral 

and counseling ser\ ices; 
(H) the preparation and deli\er\ of meals: 
(I) adoption ser\ices; 

(J) emergence shelter care and relief services: 
(K) safet\ services: 
(L) neighborhood and communil\ organization 

services: 
(M) recreation services: 

(IM) social adjustment and rehabilitation serv ices: 
(O) health support serv ices: or 
(P) a combination of serv ices designed to meet the 
needs of special groups such as the elderlv or 
disabled. 
However, an international organization vshich provides health 
and welfare services overseas, whose activities do not require a 
local presence and which meet the other eligibility criteria in 
these Rules, mav be accepted for participation in the campaign. 

AuihonnG.S. 143-33: 1438-11). 

.0205 .AGREEMENTS 

(a) Following acceptance into the SECC. federations and 
independent agencies shall execute a contract with the State. 
The parties shall agree to abide bv ^he terms and conditions of 
the rules. The contract shall be sii. =d bv the State Chair, the 
Statew ide Campaign Organization, the organization's board chair 
and the organization's chief executive officer 

(b) Each federation shall accept responsibilitv for the 
accuracv of the distribution amount to their member agencies. 
Each federation must be able to justify amounts deducted from 
their disbursements to participating agencies. These deductions 
shall not exceed 10°o of gross receipts. Each federation must be 
willing and able to provide a bond, if required, in an amount 
satisfactop. to the SECC .Advisorv Committee to protect the 
participant organizations and donors, contributors. 

AurhorinG.S. 143-3.3: 143B-W. 

SECTION .0300 - GENER-AL PROVISIONS 

.0304 P.AVMENT .METHOD .AND TERMS OF 
CONTRIBUTION 

Pavment mav be made bv pavroll deduction, cash, or personal 
check. If an emplovee chooses to use the pavroll deduction 
method of contributing, he she must agree to have the deduction 
continue for one vear with equal amounts deducted from each 
check (monthlv (monthly, semi-monthlv or hivv eeklv depending 
on the pavroll). .All deductions will start with the .lanuarv 
pavroll and continue through December. If the emplovee 
discontinues emplovment. or activelv chooses to discontinue 
pavment. the state will not be responsible for the collection of 
the unpaid pledge. No deduction w ill be made for anv period in 
which the emplovee's net pav. after all legal and prev iouslv 
authorized deductions, is sufficient to cover the allotment. No 
adjustments will be made in subsequent periods to make up for 
deductions missed. 



.Amhorin G.S. 143-3:3: 143B-10. 

.0308 EFFECTIVE DATE OF AMENDED RULES 

These amended rules shall be effective for the 199 1 1999 
SECC and thereafter. 

.Authorin G.S. 143-3:3: 1438-10. 



TITLE 4 - DEPARTMENT OF COMMERCE 

Notice is hereby given in accnrdance with G.S. 150B-21.2 
ihut the Department of Commerce-Commerce Finance 
Center intends to amend rules cited as 4 \C.4C IE .0104. .0202. 
.U205-.020-. .0303. .0306: 4 .\C4C II .0101-.0102. .0201- 
.0202. .0301-.0302. .0402-.0404. .0501-.0503. .0''01: 4 SCAC 
1K.0101-.0105. .0202-.0206. .0301-.0302. .0401-.0402. .0404: 
and repeal rules cited as 4 \CAC 11. 0303-0304. .0401. .0405. 
.0601. 

Proposed Effective Date: .April 1. 1999 

■A Public Hearing will he conducted at 10:00 a.m. on October 
30. 199S at the Department of Commerce Conference Room. 
.\'eif Education Building. Fourth Floor 301 \. Wilmington 
Street. Raleigh. \C 2'626.05'1. 

Reason for Proposed .Action: 

4 yCAC IE. 0104, .0201:0202, .0205-.0207 .0303, .0306 - For 

the Industrial Revenue Bond program, rule changes arise from 
the 1995 amettded legislation, which allow the initial operator 
of an industrial project to he replaced by a ne\v operator during 
the term of the bonds if certain findings are made by the 
Secretaiy as to the new operator 

4 \CAC II.0101-.0I02, .0201:0202, .0301:0304, .0401:0405, 
.0501:0503, .0601, .0701 - For the Industrial Development 
Fund , rule changes arise from recent additions or changes to 
the William S. Lee .Act: increase in IDF funding, the allowance 
of 2% of the funds for grant administration, the addition of Tier 
.Area designations, local government matching requirements 
specified, editorial changes needed to effect efficient 
administration of the program. 

4 yCAC IK .0101:0105, .0202:0206, .0301:0302, .0401- 
. 0402, . 0404 - For the Community Development Block Grant 
program, changes include revision of criteria for necessaiy 
findings, no longer requiring local match in Tier One areas, 
priority- given to Tier One counties or Development Zones, 
requiring cities to have a development zone committee and a 
strategy to improve the zone, and basic coordination with 
CDBG-related provisions of the William S. Lee .Act. 

Comment Procedures: Comments may be submitted to North 
Carolina Department of Commerce. .Attention: Robert Hinshaw. 
Commerce Finance Ce/tter 301 \. Wilmington Street. PO Box 
295-1. Raleidi \C 2'626-05'l. 



652 



yORTH C.AROLISA REGISTER 



October 75. 1998 



13:8 



PROPOSED RULES 



Fiscal Note: These Rules do not affeel the expenditures or 
revenues of state or local government funds. These Rules do not 
have a substantial economic impact of at least five million 
dollars (S 5. 000.000) in a 1 2-month period. 

CHAPTER 1 - DEPARTMENTAL RULES 

SUBCHAPTER 1 E - INDUSTRIAL AND POLLUTION 
CONTROL REVENUE BONDS 

SECTION .0100 - PURPOSE AND DEFINITIONS 

.0104 OPERATOR 

(a) An "operator" shall mean the persons or corporate entitv 
entitled to the use or occupancy of a project. Where all or 
virtualK all of the stock in one corporate entit\ is owned (either 
directK or indirectly ) b\ another corporation ( i.e.. a relationship 
commonK known as a "parent— wholly-owned subsidiary") and 
w here final management control rests with the parent, "operator" 
shall be construed so as to include the total corporate 
responsibility implied by such a relationship. Such presumption 
maN be rebutted where the Department finds clear and 
convincing evidence of the independence of the subsidiary from 
the parent. 

(b) Onc e th e p e rsons or corporate entities hav e b ee n d e fin e d 
as th e op e rators of th e proj e ct, th e n e .xc e pt as h e r e in provid e d. 
thos e p e rsons or e ntities will continu e as th e op e rators during th e 
t e rm of any bonds issu e d to financ e th e proj e ct. If the initial 
proposed operator of a project is not expected to be the operator 
for the term of the bonds proposed to be issued, the Secretar> 
may make the findings required pursuant to Rules .0303 and 
.0307 of" thjs Subchapter only with respect to the initial operator 
identified jn the application for approval of the project. When 
the cun-ent operator discontinues serving as operator, and 
arrangements have been made by the obligor for a new operator, 
the new operator will be subject to the approval of the Secretary 
pursuant to Rules .0303 and .0307 of this Subchapter. 

(c) If an operator subsequentK seeks to sell, to lease, or to 
sublease the project to a non-affiliated person(s) or entit\. the 
operator must give written notice to the Department of 
Commerce including information prescribed b\ the Secretary. 

AiiihoritvG.S. I59C-7; 159C-8. 



other authorities; 

(3) examination of and comment on assembled facts and 
data which might be used in the preparation of 
application; 

(4) analysis of likely or potential procedural or 
environmental problems. 

(b) At least one week prior to submission to the Department 
of a project application, the authority shall arrange for a pre- 
application conference with the Department. Parties present at 
the pre-application conference will include representatives from 
the authority, the Department, the operator, the obligor, if other 
than the operator, artd the Local Government Commission. 
Commission, and The the Department of Environment and 
Natural Resources Resources, and Community D e v e lopm e nt, or 
its successor agency, ag e ncy. will b e inform e d of and invit e d to 
participate in the conf e rence . 

(c) The purpose of the conference is to help ensure that 
application procedures and requirements are clearly understood. 
und e rstood and that th e application, wh e n acc e pt e d, will b e 
complet e and. th e refor e , the application period is short e n e d to 
what e v e r e xt e nt po s sibl e. 

(d) The operator shall offer verbal, and if available, written 
project descriptions. The operator will be encouraged to provide 
data relative to the character and volume of process wastes. 
water and air discharges of pollutants, as well as any comment 
alreadv received from the Division of Environmental 
Management. 

(e) Another purpose of this conference will be to reach an 
understanding among all parties that the project is of the t>'pe 
that ma\ be considered for approval by the Secretary. Although 
th e s e cr e tary will mak e no d e ci s ions, how e v e r t e ntativ e , prior to 
a full con s id e ration o th e compl e t e d applicat i on, the s e cr e tary 

will issu e a l e tt e r of s ummary comm e nt if that letter is 

r e qu e st e d by th e authority. This l e tt e r will conv e y the s e cr e tary's 
comm e nts p e rtin e nt to th e project and th e preparation of th e 
authority app l ication. The s e cr e tary will e numerate any points 
of conc e rn which ar e d e v e lop e d as a r e sult of informat i on mad e 
availab le in th e conf e r e nc e . — Th ese point s of conc e rn will b e 
e num e rat e d so that th e authority app l ication may includ e facts 
and data p e rtinent to thos e points. Th e i s suanc e of a l e tt e r of 
s ummary comm e nt will not pr e clud e th e se cr e tary from raising 
n e w qu e stions and ar e a s of conc e rn aft e r an application is 
r e c e iv e d. 



SECTION .0200 - APPLICATION PROCEDURES 



.Author in- G.S. I59C-7. 



.0202 PRE-APPLICATION CONFERENCE 

(a) Authorities are encouraged to advise the Department when 
the authority enters serious consideration of financing a project. 
The Department y\ ill assist the authority, as requested. y\ ithin the 
limits of available resources. Infonnation. liaison and 
coordination will be effected by the Department through the 
indu s trial — financ i ng — section. Commerce Finance Center. 
Available services include: 

( 1 ) provision of forms and documents relating to the 
application process with infonnative comments; 

(2) comment on the type of projects consummated by 



.0205 FORMAL APPLICATION PROCEDURES: 
REQUIRED DATA: INFORMATION 

(a) When making application for an approval of an industrial 
project for a prospective industry or for an existing industry, a 
pollution control project for a prospective industry or for an 
existing industry, or a pollution control project for a utility, the 
authority yvill complete the pertinent application form developed 
by the Secretary and made available by the industrial financing 
s e ction Commerce Finance Center in the Department of 
Commerce. 

(b) Any application which has factual data which is 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



653 



PROPOSED RULES 



incomplete or lacking in sufficient detail w ill he returned to the 
authority with reasons for the return being stated in writing. 
Missing or deficient information will be noted. Once the 
requested information is provided, the application will be 
accepted as officiall\ received and processing will begin. 

AuihiinnCj.S. I59C-': I59C-8. 

.0206 FORMAL APPLICATION PROCEDURES: 
PUBLIC HEARING 

(a) Where the project has caused significant adverse public 
reaction as determined from the responses to the public notice or 
the public hearing held b\ the elected board of countv 
commissioners, or the authorit\. or where the facts are unclear 
and do not support clear finding, the SecretaiA ma\ hold a public 
hearing on the proposed project for the purpose of obtaining the 
views of the community to be affected. The communit\ is 
hereb> defined as the count\ in which the project is to be 
located. 

(b) Public notice shall be given at least seven da\s prior to the 
hearing. The notice shall specif\ the date. time, place and 
subject matter of the hearing. 

(c) A complete transcript of the hearing shall be prepared b\' 
the Secretarv. The Secretary shall provide to the Secretan. of the 
Department of Environment and Natural Resources &b4 
Commun i lx D e \ el opm e. a cop\ of the transcript. 

AmhorityUS. I59C-7. 

.0207 PRO.JECT CERTIFICATION FROM DENR: 
OR ITS SUCCESSOR AGENCY 

(a) Prior to giving final consideration to the authority 
application, the Secretan, will inform the Secretary of the 
Department of En\ ironment and Natural Resources. R e sourc es 
and Commun i ty D e v e lopm e nt, or its successor agency, that the 
particular application is pending, will furnish him with a copy of 
the authority application, and will make a request that the 
Department of En\ ironment and Natural Resources and 
Community D e v el opm e nt , or its successor agency, issue a 
certification, under G.S. l50C-7(3) that in the case of a proposed 
industrial project, the proposed project will not have a materialK 
adverse effect on the en\ ironment and that, in the case of the 
proposed pollution control project, the proposed project will 
have a materiallv favorable impact on the env ironment or will 
prevent or diminish materiallv the impact of pollution vshich 
could otherw ise occur. 

(b) Prior to making anv of the findings required in 159C- 
7(l)(b) and (2). the Secretan. of the Department of Commerce 
will have received the project certification requested from the 
Department of Environment and Natural Resources. R e sources 
and Community D e v e lopm e nt , or its successor agency. 

AulhorilyG.S. !59C-'^. 

SECTION .0300 - REVIEW CRITERIA 

.0303 MANUFACTURING WAGE TEST 



(a) G.S. I59C-7 specifies that the secretary mav' not approve 
the project unless he finds that the operator of the proposed A 
project pa\s or has agreed to pa) thereafter an average weekly ▼ 
manufacturing wage w hich is either: 

( 1 ) above the average weeklv manufacturing v\age paid in 
the countv, or 

(2) not less than 10 percent above the average weekK 
manufacturing v\age paid in the state. 

(b) The Department vsill be able to make the required finding 
that either the operator pays an above-average weekly 
manufacturing wage or that the operator has agreed to pav an 
above-average weeklv manufacturing wage, if the operator 
presents clear and convincing evidence to substantiate the 
finding. The presentation of wage data will relate to a specific 
time frame. If the presentation is from an industry with an 
existing work force, the operator mav compare the annual 
average v\eeklv manufacturing vsages paid to his employees for 
a time period vshich coincides v\ith that used b_v the Emplovment 
Security Commission in compiling the latest available annual 
average insured weekK' manufacturing vv ages bv county. If, for 
a stated reason the existing companv wants to compare the 
wages paid to its employees during a later time period, or if the 
operator js a proposed industry which will present data on 
proposed and planned average vveeklv manufacturin g wages, the 
operator will make that comparison against a figure which has 
been prepared b> ttw — Labor — R e sourc e s — S e ction — of the 
D e partm e nt of Comm e rc e , or its succ e ssor. Commerce Finance 
Center. That figure will provide an estimate of the average A 
weekK manufacturing wage for the countv and for the state ^ 
during a time period corresponding to that period of time used by 
the operator. The Labor R e sourc es S e ction Commerce Finance 
Center v\ ill prepare that figure bv : 

( 1 ) posting the latest available annual average weekly 
manufacturing v\ages per worker from th e tabl e of 
statistics entitl e d "Insured Emp l ovm e nt and Wag e s by 
Broad Industry Group s by County" in th e volum e 
" N orth Carolina Insur e d Emplovm e nt and W'ag e 
Paym e nts," as published bv the Emplovment Securitv 
Commission of North Carolina; and 

(2) applving adjustment factors to those figures to \ield 
estimates of current and projected annual average 
weeklv manufacturing v\ages by countv and for the 
state. Annual adjustm e nt factors will b e d e v e loped by 
computing th e av e rag e annual p e rc e nt chang e in 
insur e d w ee kly manufacturing wag e s for the Stat e of 
North Carolina for th e most r e c e nt fiv e v e ar period. 
If th e op e rator i s a propos e d indu s try , th e op e rator 
will pr e s e nt data on propos e d and plann e d av e rag e 
v\ ee klv manufacturing wag es for a particular tim e 
p e riod. Th e comparison to show that th e op e rator has 
agr ee d to pay an abov e av e rag e vv ee klv manufacturing 
wag e , which will be mad e against a figur e pr e par e d bv 
th e Labor R e sourc e s S e ction, or its succ e ssor, as 
provid e d abov e . 

(c) An applicant mav attempt to shov\ that this methodologv 
does not yield valid results for the countv in question. To 
prevail, the applicant must be prepared to prove that his estimate 



654 



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PROPOSED RULES 



of average weekly manufacturing wages is correct by showing 
of clear and convincing evidence. 

(d) Where the industrial project does not meet the 
requirements in (a) of this Rule, a project may nonetheless be 
approved by the Secretary if: 

(1) The governing body of the county submits a 
resolution to the effect that the project be approved 
notwithstanding the fact that the operator will not pay 
an average weekly manufacturing wage which is 
above the average weekly manufacturing wage paid in 
the count\ : and 

(2) The Labor Resources Section of the Department of 
Commerce, or its successor, makes a finding from 
various labor statistics available to the Department 
that unemployment in the count> is especially severe. 
For the purpose of this Section, "especially severe 
unemplovinent" will be defined as: 

(A) unemployment which the Employment Security 
Commission statistics indicate to b e at l e ast 
five percent for the most rec e nt month, and that 
for the most recent six month period e nd in g 
with that month, hav e has averaged either: 

(i) at least 10 percent, or 

(ii) at least 125 percent of the average 
unemployment rate for the State of 
North Carolina; Caro l ina, and is at l e ast 
fiv e p e rc e nt: or 

(B) where the Department can detemiine that there 
has been within the past 12 months, or will be 
in the immediate future, a permanent closing by 
any employer in the county which resulted, or 
will result in the loss of employment b\' at l e ast 
300 workers, or at least a number of workers 
that, at the discretion of the Secretar>. js 
determined to be large enough to have a 
measurable adverse impact upon the labor 
force of the county, e qual to or gr e at e r than 
fiv e p e rc e nt of th e curr e nt labor forc e for th e 
county, as publish e d in th e most r e c e nt"North 
Carolina Labor Forc e Estimat e by Counr;y'." 
The purpose of this provision is to assist in the 
creation of employment opportunities for 
individuals displaced by industrial plant 
closings. This provision ma\ not be used as 
justification for a finding of especially severe 
unemployment if approvals granted on the 
basis of a particular plant closing have created 
more jobs than were lost in the closing. 

(3) In the case of a finding made on the basis of (d)(2)(A) 
or (d)(2)(B) of this Paragraph, the finding will 
document that: 

(A) the condition of "especially severe 
unemployment" existed at the time the 
authority agreed to make financing available 
for the project by executing an inducement 
agreement; and 

(B) the condition of "especially severe 



unemployment" still exists at the time the 
project is approved by the Secretary. 

Authorin-G.S. 159C-7. 

.0306 JOBS SAVED OR GENERATED TEST 

(a) G.S. I59C-7 specifies that in the case of either "... an 
industrial or a pollution project, except a pollution control 
project for a public utilits': that the jobs to be generated or 
saved, directly or indirectly by the proposed project will be large 
enough in number to have a measurable impact on the area 
immediately surrounding the proposed project and will be 
commensurate w ith the size and cost of the proposed project." 

(b) The Department will use as a guideline, a standard of 
requiring one job saved or generated for each on e hundr e d 
thousand do l lars ($100.000) two hundred fift> thousand dollars 
(S250.000) of bond financing for a project located jn an 
Enterprise Tier 4 or 5 area, or one job saved or generated for 
each three hundred thousand dollars ($300.000) of bond 
financing for a project located jn an Enterprise Tier L 2 or 3 
area. This ratio may be lower and still acceptable depending 
upon other critical factors, including but not limited to: 

(I) the wage scale of the facility; 

the present economic situation in the county; 
effect of the facility on the tax base of the county; 
the expected effect that the industrial facility will have 
on the development of new industry and services as 
well as any other factors which the applicant feels 
pertinent to the issu e , issue; 

the machinery and equipment financed is "state of the 
art" in technology increasing efficiency wi'h moderate 
effect on employment. 

(c) The applicant has the burden of demonstrating that the 
jobs saved or generated will have a measurable impact on the 
county. The applicant must show by clear and convincing 
evidence the number and type of such jobs generated or saved. 

AuihorityG.S. 159C-7. 

SUBCHAPTER II - INDUSTRIAL DEVELOPMENT 
FUND 

SECTION .0100 - PURPOSE AND DEFINITIONS 

.0101 BACKGROUND AND OBJECTIVES 

(a) BASIC — The purpose of the North Carolina Industrial 
Development Fund ( also to b e known as the Industrial Bu i lding 
and R e novation Fund) is to assist local, town, city or county 
governments with incentive industrial financing locat e d in th e 
most e conomically d e pr es s e d counti e s i n th e stat e in areas of the 
state that have been designated as eligible tier areas by NC 
General Statutes. This assistance will be js intended to help 
tho se unit s of gov e rnm e nt create n e w jobs by providing 
financing for th e r e novation or improvem e nt and expans i on of 
manufacturing or industria l buildings so as to induce "private 
profit making " e ntities to occu p y, by lease or purchas e , and to 
op e rate manufacturing or industrial — busin e ss e s, units of 



(2) 
(3) 
(4) 



ill 



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655 



PROPOSED RULES 



government offer to its new and expanding industr\; new or 
improved infrastructure, or funds for buildinti reno\ation and 
equipment in exchanLie for commitments to create new, full-time 
jobs in industries currentK eliuible under NC General Statutes. 
(The fund js not desiened to be used for the acquisition of land 
and buildings or constructinti ne\s buildinas.) I f the assistance js 
used for infrastructure, jt will be granted to local governments 
with no repayment: howe\er. it~it is used to purchase equipment 
or to reno\ate industrial buildings, then the funds must be 
repaid. But vshether a grant or a loan, the amount of funds to be 
made available for a project will be determined b\ the number of 
new jobs committed, w ith a maximum job limit and project limit 
as currentK authorized for the program h\ NC General Statutes. 
fb^ Th e obj e ctiv e of this program will b e to provid e n e w full 
tim e jobs for North Carolina citiz e ns. Th e D e partm e nt will 
necessarilv determin e t ha t th e r e novation s and i mprov e ments ar e 
a ne c es saP v pa n of th e privat e firms d e ci s ion to prov id e th e n e w 
job s . If it is d e t e rm i n e d that th e privat e tlmi would hav e (or has 



.0102 DEFINITIONS 

fa4 "D e partm e nt" m e ans the D e partm e nt of Economic and A 
Commun i tv D e v e lopm e nt, or its S e cr e tary. ▼ 

(a) "Department" means the North Carolina Department of 
Commerce, or jts Secretan. 

fb4 Act" m e ans S e ction 111 Part XXII of th e consolidat e d 
budg e t act codifi e d as Chapt e r 830 of th e 19 8 7 S e ssion Laws 
and am e nd e d by G.S. M3B 4 37A. 1Q80. 

(b) "Applicant" means a North Carolina unit of government 
that applies for IDF funds. 

fe^ "App l icant" m e ans a unit of c i tv gov e rnm e nt locat e d in a 
qualitl e d countv or a unit of countx gov e rnm e nt 
wh i ch m ee ts th e d e f i nition of a qualitl e d countv. 

(c) "Industrial Development Fund" means the fund w ithin the 
Department's fiscal structure jn v\hich the appropriation of 
monies for industrial development projects js received and 
disbursed. 

fd^ "Indu s trial D e v e lopm e nt Fund" m e ans th e appropriation of 




alr e ady — b e gun — te-) — sp e nd — pr i vat e — mon e y — te — mak e — th e s e moni e s given to th e D e partment for th e s e 

purpos e s. Thi ;:. fund will al s o b e known as and ref e rr e d to as th e 
industrial Bui l ding R e novation and Improvem e nt Fund . 

(d) "IDF" means the Industrial Development Fund. 

( e ) "Qua l ifi e d County m e ans one of th e 50 mo s t e conomically 
d e pr e ss e d counti e s in th e state. The Secr e tary of th e Departm e nt 
shall d e t e rmin e which counti e s ar e th e most e conomically 
depr e ss e d counties in the stat e bas e d on: rat e of un e mploym e nt, 
p e r cap i ta income, and r e lativ e population and work forc e 
growth or lack of growth, as d e t e rmin e d bv th e S e cr e tary. Th e 
figur es us e d in making this comparison and th e delin e ation of 
"most" and "least" will b e th e lat e st availabl e p e r capita incom e 
tigur e s by countv. as docum e nt e d in a publish e d form bv any 
Stat e or F e d e ral Ag e ncy — g e n e rally — r e cogniz e d as having 
expertise and cr e ditabilitv in th e s e fi e ld s . 

(f) "Em e rg e ncy As s istanc e Qualifi e d C ou nty" m e ans any 



ASSISTANCE — This special assistance from the Industrial 
Development Fund, which js used at the discretion ot' the 
Secretary, js available to units ot" governmen t that have, or will 
imminentiv ^ perience. a loss of 500 or more manufacturing 
jobs jn the county, or a number of manufacturing jobs equal to 
at least I0°o of the manufacturing workforce jn the countv. 
Where a unit ot' government relies on the 500 jobs loss as the 
threshold for obtaining this special assistance, jt must submit 
convincing evidence that the loss seriously impacts the county's 
economy, taking into account the county's tier ranking under 
Rule .0701 of this Subchapter. The funding obtainable under this 



emergency assistance category wil 



not necessarily be 



determined by the number of new jobs to be created, although countv which i s facing th e thr e at of or which i s e xp e ri e nc i ng a 



the project should lead to new jobs, or save jobs, or both, and 
help alleviate a jobs dislocation problem. The Secretan will 
detennine the amount of funds for a project, up to the maximum 
currently authorized for the program by NC General Statutes and 
according to new job loss criteria expressed in the Statutes if that 
has changed. This assistance will be jn the fonn ot"a jow interest 
loan to the governmental unit, amortized over five years with 
repayment beginning at the end of the second year. 

icj UTILITY ACCOUNT— Within the jDF structure, the 
Utility Account provides tlnancing to units of government for 
jobs creation and investment jn the fier area(s). and for 
benefiting finns currently authorized by NC General Statutes. 
Funds may be used for construction or improvements to water. 
sewer, gas, or electrical utility lines and equipment for existing 
or proposed industrial buildings. There js no specific amount ot" 
funding specified for each new job or project, but the impact ot' 
the fundin g should lead to the creation ot' new jobs and new 
investment. As with basic IDF financing, jt' Utility Account 
funds are spent for public property, the assistance is a grant: for 
private property, it is a loan. 

AinhnriirG.S. I4}B-43~A. 



major economic dislocation. A major e conomic dislocation 
would m e an th e actual or immin e nt los s of manufacturingjobs 
caus e d h\ on e or mor e plant closing(s) or one or mor e 
announc e d plant layoff(s) which aff e ct: 

f+4 at l e a s t 500 jobs: or 

(^ a numb e r of job s which i s e qual to or e xc ee ds t e n 
p e rc e nt of th e e xisting irianufacturing work force. 
In th e ca se of Subparagraph (f)(2) of th e Rul e , th e numb e r of 
jobs impact e d must e xc ee d 50. 

(e) Eligible tier areas means the aggregation of North 
Carolina counties into groups in which certain economic benefits 
apply, as currently authorized by NC General Statutes. 

(f) "Unit of Government" means a town, city or county of the 
state. 

(-fr) — "Proj e ct" m e an s one or more activiti e s propos e d for 
funding, or for partial funding, und e r this Rul e . Such a proj e ct 



r+H — b e d e scrib e d — in a narrativ e 



and 



d bv — a 



accompam e 
pr e liminary s e t of drawings which s e t out th e e xact factual 
s ituation and a d e tail e d sch e dul e of costs from a contractor or ^ 
e ngin ee r Th e sch e dul e must const i tute an ability to compl e t e ~ 
such proj e ct with no mor e than a ten p e rcent cont i ng e ncy. All 
such project mat e rial will prov id e evaluations of pot e ntial for 



656 



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October 15, 1998 



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PROPOSED RULES 



unusual sit e characteristics which might influence con s truction 
or op e rating costs. In e ach ca se , the proj e ct d e scription will 
docum e nt th e dir e ct r el ationship b e t^v ee n th e proj e ct and th e job s 
created. 

(o) "Full-time Job" means a job that requires at least 1600 
hours of work in a vear. 

(k) "R e novation" shal l have the same m e aning as proj e ct, as 
described in Paragraph (g) of thi s Rul e . 

(h) "Infrastructure" means utilities, typicalh referred to as 
"public utilities." and in some cases a rail spur u here 
there js public ownership of the raj] propert\. 

fi4 "Secretary " m e ans th e S e cr e tar> of the D e partm e nt, or his 
designee. 

£ij "Grant" means mone^ given to a unit of government to pay 
for an economic development project and does not have to be 
repaid, if the terms of die grant are fulfilled, i.e. the jobs 
commitment is met. 
fH "Stat e " means the State of North Carolina. 
tjj "Loan" means mone\ loaned to a unit of government to 
pa\ for an economic development project, to be repaid by the 
borrower based on an amortization schedule approved by the 
Department. 

(+t) "S e v e r e N Depress e d" counties m e ans thos e counti e s so 
d es ignat e d under G.S. 105 130. 10(c) or G.S. 105 151.l7(c)or 
units of governments within thos e counti e s. 

(k) "Project" means an activit\ proposed for IDF funding. It 
will be described narrativeh in an application and accompanied 
by a preliminarN set of drawings, or sketches, or other data that 
present the project in factual detail, together with a schedule or 
itemization of costs from an engineer or contractor. The schedule 
of costs shall constitute the ability to complete a project with no 
more than a 10 percent contingency'. 

fl-) Proj e ct e xp e nditur e s for e xisting buildings ma> 
includ e : 
iJj Project expenditures may include: 
(JJ For basic IDF 

(A) the construction of. or improvements to 
e xisting water, sewer, gas or electrical utility 
systems, distribution lines, or required storage 
facilities, or a raH spur when either js publicK 
owned and operated, and or; 
the renovation of buildings to includ e including 



(B) 



(C) 



structural repairs, structural improv e m e nts such 
as roof r e pair, repairs , addition of docks, or th e 
erection of walls, or sp e cial structural supports 
te — support — cran es : for heavy equipment, 
electrical upgrades, or HVAC upgrades; 
improvements to th e building that are necessary 
to make the a building suitable for the 
occupancy of th e bui l ding by th e occupant and 
the operator of the project. Such improvements 
may include mechanical equipment such as 
heating er and air conditioning equipment, 
plumbing, pipes or trenching to handle 
effluents or process yvater. special electrical 
additions n e cessary for ov e ns, furnac e s or 
oth e r proc e ssors and lighting. If a r e novation or 



an improvement is critical to the operation of a 

particular manufacturing or indu s tr i al 

busin e ss es , business, or. if such improvements 

afe or js critical to the decision making process 

pertinent to the creation of sueh jobs, the actual 

improvement need not be located on the site of 

the i ndustrial main project building. If, 

however, a grant of funds js involved, the 

improvement must be constructed on public 

right-of-way s or on property y\hich the unit of 

government has an easement to treat as it 

normally y\ould do as if it owned the property. 

Hovsever. yshen extending infrastructure to a 

Finn. IDF assistance ends at the private 

property line. SfiW; in either situation, the 

application must document the exact 

relationship e4' betyveen the jobs and the 

project. An example of a fundable project 

would be the case yvhere a tlie unit of 

government must construct an elevated yvater 

tank and service wat e r lines to provide water to 

a building so as to provid e sprinkler vy ator to a 

building yvhere such service is directly required 

to operate tlw an industrial or manufactur i ng 

business. An example of an unfundable project 

yvould be yvhere a unit of government seeks to 

expand or to repair its y\ater utility (or other 

infrastructure) system and yvhere the 

relationship '.j the creation of jobs is fairly 

general or indir e ct vague. The project yvill be 

described +h — from the perspective of 

employment to be created in th e and jts impact 

ar e a of to the project. Dir e ct and indir e ct jobs 

will b e tr e at e d separat e ly in th e di s cussion. Th e 

operator of the project yvill provide d e tails as to 

th e natur e of dir e ct jobs cr e at e d, including the 

skil l s r e quir e d, work condit i ons, yvag e s paid 

and s e asona l intlu e nc e s on th e numb e r of yvork 

days p e r y e ar 

fD-) th e installation of or purchase of manufacturing 

e quipm e nt or proc e s s productions e quipm e nt. 

(D) the purchase and installation of equipment that 

js associated yyith the industrial classification 

of the project. 

(^ In th e case of counti e s d e signat e d as "s e v e r e ly 

depressed". — proj e ct — e xp e nditures — may — includ e 

construction of or improvem e nt to n e w or e xi s ting 

wat e r, s e yy e r, gas, or e lectrical utility distribution lin e s 

or e quipm e nt to se rve new or propos e d industrial 

bui l dings to b e u se d for manufacturing and industrial 

op e ration s . Such infrastructur e shall b e locat e d on th e 

s it e of th e building or dir e ctly r e lat e d to th e sp e cific 

manufacturing activity. 

(2) For Emergency Economic Development Assistance - 

Loans to local units of government for economic 

dey elopment projects designed to create jobs, lead to 

the creation of jobs, or save job s, and to assist jn 



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657 



PROPOSED RULES 



ID 



alleviating the economic dislocation created by the SECTION .0200 - GENERAL REQUIREMENTS 

loss of jobs. 

For the Utilit\ Account: 



lAJ 



LBJ 



the construction of. or improvements to water. 
seuer. sas or electrical utilit\ s\ stems. 



distribution lines, or required storatie facilities. 
org raU spur or rail line when either is publicK 
owned and o perated, and or: 
equipment for existing or proposed industrial 
buildings for operations m the industrial 
classifications that are currentK eligible to 
recei\e Utilit^ Account funding within the tier 
area. 



(m) "State" means the State of North Carolina. 

(n) "Application" means the pages of documents in which an 
applicant for IDF funds identifies itself describes a project, 
specifies the funds required. pro\ ides a breakdown of project 
costs, and submits the benefiting film's commitment to create 
jobs and evidence of" its credit worthiness. 

(o) "Local Matching Funds" means funds of a unit of 
go\ ernment contributed to an economic de\elopment project for 
the purpose of assisting jn a total financing package and earning 
(or winning) other funds by doing so. Matching js usualK 
expressed as a ratio, i.e. one local dollar for three state dollars. 
0" one for three. 

"J "Local Matching Requirement." The Department requires 
local matching in grant projects except for Emer genc\ Economic 
Dexelopment Assistance projects and those located in a tier area 
that has been exempted from matching b\ NC General Statutes. 
The required rate will be one for three, or one local dollar for 
each three state dollars. 

(q) "Participation Loan" means a loan between at least three 
parties, to wit: A bank or financial institution, the private firm. 
and the unit of" go\ernment. The essence of" a participation loan 
is that the bank, or financial institution, and the unit of" 
government will share at least equalK in the lending 
arrangements, meaning the mone\ loaned and the risk involved 
and collateral shared. 

(r) "Borrower" means the private firm identified in a 
participation loan for building impro\ement or equipment hi the 
basic IDF, or the unit of go\emment when the mone\ is spent 
for emergencN economic dislocation assistance or when the 
mone\ is reloaned in a utilit\ account project. AdditionalK. the 
unit of government will be tlie borrower when IDF is used to 
assist local matching, or in other cases when the Department 
believes the project can be more prudentK structured as a loan 
rather than a grant. 

(s) "Preapplication Conference" means a meeting held at the 
Department to discuss a proposed IDF application and includes: 
a representative of Commerce Finance Center: the ap plicant: an 
official of' the benefiting flmi: and a banker, if a participation 
loan is involved. A preapplication conference mav be waived 
when the total IDF expenditures are expected to be flft^ 
thousand dollars (S50.000) or less. 

Auihurirv U.S. 105-129: N3B-I3'.4: 143B-43'.01. 



.0201 DATE OF RECEIPT OF APPLICATIONS 

The Department of Comm e rc e will receive applications after 
November 15. 1987 on a first-come, first-serve basis. An 
application Applications will be assigned a processing ease 
number when that application it is received and is judged to b e 
sufflcientlv complete for consideration. W h e r e When possible, 
applications will be processed in the order of the processing 
numbers assigned. 

AuiborityG.S. !-l3B-43'.4. 

.0202 APPLICATION CATEGORIES AND 
REQUIREMENTS 

(a) Applicants can app iv f or funding und e r diff e rent grant 
cat e gories, including th e cat e gori e s of 

<-4^ utilirv improv e ments or additions ov\n e d b\ public 

bodi e s: 

(3^ utility improv e ment s or addition s own e d b\ private 

e ntiti e s: 

f5-) industrial faciliti e s own e d b_v pub l ic bodi e s but b e ing 

l e ased or b e ing improv e d for imm e diat e or d e lav o d 
sal e to privat e op e rators, or to private "amis l e ngth" 
landlords: 

(-H industria l and manufacturing faciliti e s own e d bv 

privat e "non profit" e ntiti e s such as "Communitv 
D e v e lopm e nt Corporations" or Committ ee s of 100" 
funded and or e ndors e d bv th e e l e ct e d l e ad e rship of 
th e unit of Gov e rnm e nt: and 

f?-) industrial and manufacturing faciliti e s owned bv "for 

profit" entiti es to b e improved bv funds loan e d to th e 
privat e "profit maldng" ontit> by a unit of citv or 
count\ gov e rnm e nt. 

(a) Applicants can appK for funding under different 
categories, including: 

UQ Basic IDF: 

(2) Emergency Economic Development Assistance; 

(3) The Utility .Account. 

(b) TTiere is no set minimum grant amount of funding which 
applicants mav request er to be awarded, if there are practical 
difficulties about a small amount or cost disadvantages, these 
vsill be discussed with the applicant in a preapplication 
conference. GraHt IDF awards shall not exceed the total amount 
sp e cifi e d appropriated bv the General Assemblv in its 



appropriation process. Chapt e r 830 of th e IQ 8 7 S e s s ion Laws, 
in S e ct i on 111. Paragraph (2), limit e d th e maximum grant to a 
sum not to e xc ee d th e l e s se r amount the two hundr e d flft> 
thousand dollars (S2-s0.000). or a total of twelve hundr e d dollars 
(SI. 200) for e ach job cr e at e d. For basic IDF, per job or per 
project maximum funding limitation will be the amounts 
established under current law, as well as Emergency Economic 
Development Assistance. There is no maximum set for LItility 
Account funding: but the amount of awards will be determined 
by the Secretary. For th e purpos e of this S e ction basic IDF. the 
per job limitation will be impo se d applied on the basis of 
requiring a comiiiiiment from the occupying industrial or 



658 



NORTH CAROLINA REGISTER 



October 15. 1998 



13:8 



PROPOSED RULES 



that position. Jf either an out-of-state bani< or a financial 
institution other than a bank is used in a participation loan, that 
must be approved b\ the Department. 

(e) Also under basic IDF, jf funds are provided to a unit of 
ao\ernment to accomplish a project apart from the uses 
described under Paragraph (c) of this Rule, i.e. providing 
matching funds, that ma\ be handled by a loan directh to the 
unit of government. In this case the Department will furnish a 
loan repa\ment schedule to the ma\or. cit> manager or county 
manager, which, in addition to the award letter and application, 
will establish the responsibilit\ for repayment, and times and 
amounts of repayment. 

(f) Loans for Emergenc\ Economic Development projects 
will be accomplished as in Paragraph (d) ot" tins Rule. 

(g) Loans for Utility Account projects will be accomplished 
as rn Paragraph (d) of tfus Rule except for building 
impro\ements or equipment tfiat tlie operator will own. In that 
case, the loan will be a panicipation loan as in Paragraph (c)of 
this Rule. 

(h) With either grants or loans, the Department will require 
i+1 — propos e a plan — of proj e ct — admini s tration — which — is financial infonnation from the project owner or operator to 

establish financial capability. The usual requirement will be the 
preceding three years" financial and operating statements: for 
new businesses, at least three years pro fonna statements and a 
business plan. ]n any case, the Department may use credit 
reports, bank infonnation. or other data that it deems appropriate 
to establish the credit worthiness of ttie borrower. 

(i) A project will be subject to review b\' the Department at 
an^ time during the first three vears after the project begin? 

(j ) The Department may require a unit of government to 
partialK or fulK accelerate loan repayments if the operator's 
business has closed, moved, or if the company has not made 
reasonable progress toward its jobs creation commitment. The 
Department ma\ require repa\ment of a grant. partialK or fully. 
if the operating compan\- has moved, closed, or fias not made 
satisfacton progress towards its jobs creation commitment: and. 
in the case of Emergency Economic Development Assistance or 
the Utility Account, if funds are not spent in thie manner for 
which thcN' were a pproved. 

AiithorlnG.S. 1 43 8-43" A. 

SECTION .0300 - SELECTION PROCESS 

.0301 REVIEW OF APPLICATIONS AND FUNDING 

(a) Applications will be submitted in a manner prescribed b> 
the Department. Selection of applications for funding will be 
based primariK on information contained in the application. 
Thu s K th e application application, which must provide sufficient 
information so as to allow the Department to rate it against the 
s e l e ction approval criteria. When an application is deemed 
complete, it will be assigned a processing ease number. 

(b) Applications for funding of Em e rg e ncy Assistanc e 
proj e cts may be submitted directly to the Secretary of the 
Department. The\ ma> also be submitted to the Department's 
Commerce Finance Center. Room 2 1 7 4 . Dobbs Build i ng. -1 30 N. 
Sai i sbuiy Str ee t. Post Office Box 29571. 301 North Wilmington 



manufacturing firm operator of the business as to the number of 
jobs it will cr e at e that wjij be created over a reasonable period of 
time, not to exceed three years. Th e number of jobs cr e at e d w i ll 
includ e onK thos e p e opl e directh' e mploy e d in p e nnan e nt or 
s e asonal jobs b> th e op e rator who occupi e s th e facilit> : indir e ct 
and temporary jobs will not b e includ e d . Those will be 
permanent, full-time jobs: no temporan, or contract jobs. 

(c) Wh e n a proj e ct r e novation or improvement i s to b e 
accompli s h e d to a building or on a sit e own e d by a privat e e ntity, 
wh e th e r th e privat e e ntity i s conduct e d on a "for profit" or on a 
"not for profit" basis, th e project vh ill b e financ e d by a loan to 
that privat e e ntit\. This loan will b e mad e to th e privat e e ntit\ by 
the l ocal unit of gox e mm e nt \sith funds mad e a\ailabl e from thi s 
program. In e ach case, th e l oca l unit of gov e rnm e nt will 
e stablish its own authority to do that financing. Th e applicant 
will r e quir e and provid e to th e D e partm e nt of Comm e rc e 
satisfactory docum e ntation that all co s ts ar e r e asonab le and that 
all funds ar e to b e e xp e nd e d with r e gard to th e conflict of 
interest — statut e s — r e gulating — busin e s s — tran s actions — between 
gov e rnm e nt officials and oth e r involv e d parti e s. Th e applicant 



sati s factory for th e D e partm e nt of Comm e rc e . 

fd^ — All funds e xp e nd e d which dir e ctlx assist participating 
privat e e ntiti e s must b e r e paid to grant r e cipi e nts and th e n 
return e d to th e D e partm e nt of Comm e rc e as such r e paym e nts ar e 
receiv e d. Such r e paid funds w ill not b e r e turn e d to th e G e n e ral 
Fund, but s e t asid e to fund n e w proj e cts approv e d und e r this 
Subchapter. G e n e rally, proj e ct grant s classifi e d und e r Ru le 



.0202 (a) (I) wi l l not b e r e paid. R e paym e nt for proj e cts 
oth e rwi s e classified — Ftw. — b e giv e n — subordinat e — collat e ral 
positions, int e rest costs which ar e at l e ss than mark e t rat e s, or 
amortization which d e fers cash flow, in so long as r e quests are 
docum e nt e d as n e c e ssary to the creation of jobs and th e s ucce s s 
of th e proj e ct. 

( e ) A proj e ct will b e subj e ct to r e vi e w b> the Department of 
Comm e rc e at an> tim e during th e first thr ee y e ars aft e r th e 
project b e gin s . For a proj e ct classifi e d und e r Rul e .0202 (a) (2) 
(3) ( 1 ) and (5) of this Rul e , any r e payment balanc e that it ow e s 
th e local unit of gov e rnm e nt max b e partialK or fulK acc e l e rat e d 
if th e bu s in e s s has clo se d, or if th e op e rating compan\ ha s not 
mad e r e asonabl e progr e s s toward s its jobs cr e ation goal. 

(c) The Department may authorize a local unit of government 
that receives IDF funds to use ug to two percent of tlie funds to 
verify that expenditures are made in accordance with the law and 
rules and to otherwise administer the IDF project. 

(d) Under basic IDF, improvements to building properties and 
equipment purchases (either of which becomes private property) 
will be loan projects and will be accomplished w ith participation 
loans. The three parties to a participation loan will be: the 
borrower's North Carolina bank, the borrower, and the unit of 
government. The bank and the unit of government (using IDF 
funds) v^ill be at least equal participants, sharing equalK in the 
funds provided and in the risk and collateral involved. The bank, 
however, may supply more money than just matching IDF: in 
this case, the bank's p ro rata share is simply larger. Also, in the 
matter of sharing equally, this means that it' the bank takes a 
certain collateral position, the unit of government yvill share in 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



659 



PROPOSED RULES 



Street. Raleigh. North Carolina 27 611 . 27626-0571. The 
Department will maintain a polic\ that applications be approved 
or denied b\ the last day of the calendar month following 
assignment of a processing ease numb e r a s s e t out in Rul e 
. 2 1(Q). number. When possible, applications will be processed 
in the order that ease processinu numbers are assigned. 

AuthoritvC.S. N3B-43'A. 



.03(14 ELIGIBILITY REQ/EMGY ASST PROJ 
DEFINED/RL'LE .0102(h) 

Application for Em e rg e nc\ Assistanc e proj e cts defined in 
Rul e .0102(h) will show that: 

f4-) th e e conomic e m e rg e ncy e xists, or is imminent, and 
(3-) th e proj e ct will, or will t e nd to. all e viate the ospcciall> 
s e v e r e e conomic e m e rg e ncy caus e d by th e d e scrib e d 
economic dislocation. 



.0302 ELIGIBILITY REQUIREMENTS 

Applications will show that: 

(1) -fh&i this funding is a vital part of the proposal to 
create the jobs set out and that the jobs will not be 
created if the project goes unfunded, and 

(2) That the project is completelv funded or financed, 
except for the particular funds sought in the 
application, and 

(3) The the involvement of the local unit of government 
is formal K authorized bv its elected board under 
specific resolution and b\ specific State Statute, and 

(4) TTte the participating private entitv' must provide a 
fetter statement of commitment relating to the project. 
That l e tt e r commitment w ill state that the project is to 
be carried out as described in the application, with 
specificit> as to time schedules and to the parties 
involv e d, involved. 

( 5 ) the expenditure of private monev on the project has 
not begun, and 

(6) the project has not vet begun, i.e. monev spent on the 
project, or public announcements made that the 
benefiting firm plans to do the project before the 
Department has been requested to participate with 
IDF. 

(7) for Emergency Economic Development Assistance 
Projects, there exists an emergency in the economy 
large enough to be considered an economic 
dislocation as set out jn G.S. 143B-437A. and 

(8) The project for which funding is sought mi ght help to 
alleviate the economic emergency described in 
Subparagraph (7) of this Rule. 

Aiahortn- Section 111 at Pun XXII Chapter 830. 198' Session 
Laws. 

.0303 REVIEW: APP/FUNDING/EMGCY .ASST PROJ 
DEFINED/RULE .0102(h) 



Authorit}- Section IX of Chapter '54. 1989 S.L 

SECTION .0400 - APPROVAL CRITERIA 

.0401 GENERAL 

In ord e r for th e D e partm e nt to approv e a proj e ct, or an 
"Em e rg e ncy Assist e nce proj e ct"", th e S e cr e tary is r e quired to 
mak e — c e rtain — findings — nec e s s ary — te — docum e nt — that — the 
D e p a rtm e nt is conducting th e duti e s sp e cifical l y giv e n to it in 
Chapt e r 830 of th e 1087 S e ssion Laws, thos e duti e s e xpr e ss e d 
in oth e r G e n e ral Statut e s, and in Rul e .0 4 02 of th e s e procedur es , 
in a r e sponsib le and prud e nt mann e r. 

Authority Section 111 of Part XXII Chapter 830. 198' Session 
Laws: Section IX of Chapter '5-1. 1989 S.L. 

.0402 REQUIRED FINDINGS 

(a) Before the Department can b e gin to make the approval as 
sp e cifi e d in G.S. Chapt e r 830. approve a project, a finding must 
be made that the project: 

( 1 ) Will will assist a unit of Government in one of the 
most e conomically d e pr e ss e d counti e s eligible tier 
areas of the State: Stat e as m e asur e d b> m e dian p e r 
capita incom e , and 

(2) The the funds will be used for renovation of buildings 
buildings or infrastructure or equipment to be us e d in 
manufacturing and industrial operations currently' 
e ligibl e und e r NC G e n e ral Statut e s by firms that have 
industry classifications currently eligible for tax 
incentives under G.S. 105-129. 

(b) The s e cr e tary Department y\ill docum e nt, document a 
finding based on data provided to him e ith e r in the application 
or by staff research, that the jobs to be created bv this a proj e ct 
project, over no more than a three year period, will be large 
enough in number to have a measurable favorable impact on the 
area immediately surrounding the project and will be 
commensurate v\ith the size and cost of the grant to the project. 



Applications for funding for proj e cts d e fin e d in Rul e .0102 (h) The D e partm e nt will us e as a guidelin e , a standard of requiring 
will show that: on e job sav e d or g e n e rat e d for e ach on e thou s and two hundr e d 

fH There exists an e m e rg e ncy in the e conomy' larg e do l lars ($1,200) in grant financing. The applicant has the burden 

of demonstrating that the jobs w ill have a measurable impact on 
the county. The applicant must show by clear and convincing 
evidence the number and type of such jobs generated. 

(c) The s e cr e tary Department will make a finding that the 
operator of the proposed project has demonstrated the 
capabilities to operate such a facility. The applicant has the 
burden of showing that capability exists in the operator to 
operate and maintain the facility efficiently and effectively. 



e nough to b e consid e r e d an e co no mic dislocation a s 
s e t out in G.S. I I3B 137(d) and. 

{¥> That th e proj e ct f o r vyhich funding is sought might 

h e lp to alley iat e th e e conomic e m e rg e ncy d e scr i b e d i n 
Subparagraph (1 ) of thi s Rul e . 

Authority Chapter '54. 1989 S.L. 



660 



NORTH CAROLINA REGISTER 



October 15. 1998 



13:8 



PROPOSED RULES 



Financial strength and prior related experience by the operator 
will be give n groat weight, evaluated. Where little or no prior 
experience can be demonstrated, the qualifications of 
management, including production or engineering staff, as 
applicable, will be of great prime significance. 

(d) The secretary' Department will make a finding that tlie IDF 
financing of such for a project by the authority will not cause or 
result in the abandonment of an existing similar industrial er 
manufacturing facility of the proposed operator of an affiliate 
elsewhere in the state unless the facilitv' js to be abandoned 
because of obsolescence, lack of available labor, or site 
limitations. The Department shall consider an abandonment 
statement as prima facie proof of lack of abandonment. 

( e ) Th e D e partm e nt shal l us e th e d e finition s of t e rms found 
in S e ction .0200 of thi s Subchapt e r to mak e th ese findings. 

(e) For Emergency Economic Development projects, the 
Department \\\\\ make a finding that: 

( 1) the economic emergency exists, or is imminent, and 

(2) the project will, or w ill tend to, alleviate the especially 
severe economic emergency caused by the described 
economic dislocation. 



£f) For Utility Account projects, the Department will make a 
finding that the proposed funding should create new jobs or 
reasonably be expected to lead to the creation of new jobs in the 
industries currently eligible for Utility Account financing 
assistance as specified in NC General Statutes. 

(g) The Department shall use the definitions of tenns found 
in Rule .0102 of this Subchapter to make these findings. 

Authority <J.S. 1438-43'^ A. 

.0403 FORMAL APPLICATIONS PROCEDURES: 
DENIAL 

(a) Unless the applicant has met its various burdens of proof, 
the secretary Department shall not make hts the required 
findings. 

(b) All findings shall b e i n writing and wh e r e Where adverse 
findings are made, they shall specifically indicate in detail which 
elements of proof were weak, the required conclusions which 
could not be mad e made, and any suggestions for amending the 
application. 

AiithoritrG.S. N3B-43^A. 



DEFINED/RULE .0102(h) 

(a) B e for e th e D e partm e nt can b e gin to mak e th e approval of 
and to fund an Em e rg e ncy proj e ct as d e fin e d in Ru l e .0102(h), 
the Secr e tary will determine that th e e conomic dislocation 
describ e d has caus e d an e conomic e m e rg e ncy and that th e 
e m e rg e ncy is of such s i z e that e xtraordinary m e asur e s ar e 
r e quir e d to h e lp all e viat e th e e m e rg e ncy. 

fb^ — That th e funding for Em e rg e ncy projects during the 
curr e nt budg e t has not. 

fe-) — Ev e n with th e funding for th e Em e rg e ncy proj e ct so 
approv e d, will not exceed one hundr e d thousand dollars 
($100,000.00). 



Aiithorm- Section IX of Chapter 754. 1989 S.L 

SECTION .0500 - RESERVATION OF FUNDS 

.0501 GENERAL 

Units of government may apply for a "430 45 day reservation" 
of funds, relating to a particular building r e novation, so as IDF 
project to a l low local units of government to induce prospective 
private sector employers to locate or expand and thu s ly, to create 
new jobs. The Secretary Department may accept and approve the 
requests where local units of government earn can document 
that: 

( 1 ) Docum e nt that they have the potential for a project of 
strong merit: 

(2) Wh e r e a particular employer is interested in a 
proposed industrial building; 

(3 ) Wh e r e strong competitiv e offers have been made to 
#H? a client ifi by other states or wh e r e mor e 
comparative propo s als have b ee n — mad e to th e 
potential employ e r by communities located in the least 
distress e d counti e s, tier areas not currently eligible for 
IDF funding. That application wou l d b e A request 
will be prepared along the lines of the application for 
approval described in Rule .0302 of this Subchapter, 
except that the data normally obtained from the client 
or potential employees would not fee necessarily be 
prepared by the client and would not be required in 
such detail. 

AiithorinG.S. 143B-437A. 



.0404 FORMAL APPLICATION PROCEDURES: 
APPROVAL 

(a) Where the S e cr e tary Department makes all the findings 
necessary, he jt will do so in writing to the applicant at the 
earliest possible date after follow ing the procedures as set forth 
in this Subchapter. 

(b) The S e cr e tary' Department will prepare a letter of approval 
in which all his find i ngs a s s e t forth and cause this letter to be 
mailed to the applicant. 

Aiithorit}-G.S. 143B-437A. 

.0405 FINDINGS REQ/APPROVAL/EMGCY PROJ 



.0502 LIMITATIONS 

Such approvals Approvals to requests may be made in so long 
as that the "reservation of funds" for that a project will not cause 
the total program funds "reserved" in that manner to exceed a 
sum not larg e r than an amount e qual to one third one-half of the 
total of program funds available and not previously committed. 
committ e d in th e r e gular approval proc e ss. The total of 
programs funds not previously committed will include 
appropriated funds, those funds received in repayment from 
recipients, interest earned, accrual in e scrow accounts and funds 
not used and reverted from either approved projects or from 
"reserved" funds. 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



661 



PROPOSED RULES 



AmhorinG.S. I43B-43'A. 

.0503 REVERSION OF FUNDS 

An appro\al for "reser\ation" of funds for projects will not 
predicate appro\al or funding €4" a project. When a formal and 
complete application for appro\al of a project has not been tiled 
b\ the applicant that requested the reser\ation of funds, before 
the expiration date of the "reser\ation of funds", the Department 
ma\ re\ert those funds back to the program without an\ 
obligation to the unit of go\emment. Such r e v e r s ion of funds 
will b e communicat e d to th e unit of gox e rnm e nt in writing. It 
shall be the responsibilit^ of the unit ot" gowmment to keep track 
of when the reser\ation of funds e.xpires. 

AuihoriryG.S. 1 453-43' A. 

SECTION .0600 - REPORTING REQLTREMENTS 

.0601 REPORTING REQLTRE.MENTS 

(a) Th e Department of Comm e rc e will r e port annually to th e 
Gen e ral AssombK conc e rning th e applications made to the fund 
and th e pa\m e nts mad e from th e fund and the impact of th e 
pQ\m e nts in th e targ e t e d counti e s. This r e port will b e fil e d 
annualK with th e General ;\GsembK either at the expressed 
conveni e nc e of th e Hous e and th e S e nat e or b> March 1 of each 
x e ar at th e offic e s of th e Lt. Go\ e mor and th e Sp e ak e r of th e 
Hous e . 

fb4 — The Departm e nt o^ Commerc e will also til e monthK 
reports with th e Joint L e gislati\ e Commission and th e Fiscal 
R e s e arch Di\ ision. Th e s e r e ports will comm e nc e on Noxember 
30. 1087 and s hall nam e th e parn(s) to whom pa\ments w e r e 
mad e , in what amounts, and. for what purpos e s. 

Authority Section 111 of Pan XXU Chapter 830. 198' Session 
Lm\s. 

SECTION .0700 - DESIGNATION OF QUALIFIED 
COUNTIES 

.0701 DESIGNATION OF THE FIFTY MOST 

ECONOMICALLY DEPRESSED COUNTIES 

Each > e ar. on or b e for e D e c e mb e r 31. th e Secretary of the 
Departm e nt of Economic and Communitx D e v e lopm e nt shall 
d e signat e th e .^0 most e conomicallx d e pr e ss e d counti e s in th e 
stat e : this d e signation s hall b e for th e following calendar \ear. 

Each \ear. on or before December 31. the Secretarx of the 
Department of Commerce shall rank each of the 100 counties of 
the state according to criteria currentK set by NC General 
Statutes. The highest numericalK ranked count\ shall reflect the 
most adverse economic data, whereas the lowest ranked count^ 
shall retlect the most favorable data. This listing of all counties 
shall then be divided into groups or tier areas. The Secretarx' 
shall designate at that time those counties and their tier areas that 
are eligible to participate in the Industrial Development Fund 
using the priorin specified under current statutes. This 
designation ]s effective for the following \ear: however, a Tier 
One county retains its designation for at least two consecutive 



years. 

Authorities. 105-129.3. 

SUBCHAPTER IK - ECONOMIC DEVELOPMENT 

ACTIMT^ OF THE COMMUNITY 

DEVELOPMENT BLOCK GRANT PROGRAM 

SECTION .0100 - GENERAL PROVISIONS 

.0101 PROGRAM PURPOSE AND OBJECTIN E 

The purposes and objectives of the North Carolina 
Communitv Development Block Grant program are set out in 
full in the North Carolina .Administrative Codes Title 4. 
Subchapter I9L. as promulgated b\ the Division of Community 
.Assistance of the Department of Economic and Community 
Development. Commerce . While the Di\ ision of Community 
.Assistance is the lead agencv for the Community Development 
Block Grant Program, the Commerce Finance Center is 
responsible for the administration of th e Economic D e v e lopment 
program and activities conducted as under the Economic 
Development section of that program. Economic Development 
projects and grant activities consist of projects which directK 
cr e at e or r e tain support the creation or retention of jobs, 
principallv for persons of low and moderate incom e . famiK 
income (LVll) status. The major guideline requires that 60 
percent of jobs created or r e tain e d will be heW filled b\ persons 
with LMI status who qualified as p e rsons of low and moderate 
income wh e n th e \ wer e prior to being hired b\ the Emplo\ e r. 
Employer, or who are documented as having LMI status at the 
time of project application [n the case of retained jobs. Such 
creation of jobs must tak e place within th e grant p e riod. If at 
an\ time during the grant period the percentage of jobs held by 
persons who qualified as low and mod e rat e incom e LMI when 
hired drops below 5I°o of the jobs retained or created, the 
beneficiarv or beneficiaries and the grantee vv ill be directly liable 
for repayment of the grant. All CDBG expenditures which 
directly assist participating priv ate businesses must be provided 
as loan funds, and be returned to the D e partm e nt, repaid under 
terms established at the time the program funds are awarded to 
the local government grantee. Certain other program income, or 
a portion of other program income, such as connection fees, 
acreage development fees, or consideration receiv ed for the sale 
of public utilities to private concerns or regulated utilities will be 
considered as money that will be returned to the CDBG 
Economic Development Program and used to finance other such 
Economic Development projects. On e e xampl e of such a 
situation would b e wh e n CDBG Economic D e v e lopm e nt mon e y 
is originally us e d to fmanc e a gas line own e d bv a cifv or county. 
and th e gas line is th e n acquir e d by a r e gulat e d natural gas 
distributor. Some n e gotiat e d portion of the acquisition cost paid 
by th e privat e utility would th e n b e r e turn e d to the state and used 
to financ e oth e r utiliti e s e xt e nsions such as natural gas lin e s to 
other e mploy e rs of low and mod e rat e incom e p e opl e . 



Authority G.S. 143B-431: 
5-0.494: 42 U.S.C.A. 5301. 



:4 C.F.R. 5-0.489: 24 C.F.R. 



662 



.\ORTH C.4ROLIX4 REGISTER 



October 15. 1998 



13:8 



PROPOSED RULES 



.0102 DEFINITIONS 

(a) "Act" means Title I of the Housing and Communirv 
Development Act of 1974, P.L 93-383, as amended. 

(b) "Applicant" means a local government which makes 
application pursuant to the provisions of this Subchapter. 

(c) "CDBG" means the State administered Communit> 
Development Block Grant Program. 

(d) "Chief Elected Official" of a local government means 
either the elected mayor of a cit\ or the chaimian of a countv 
board of commissioners. 

(e) "Communit> Development Program" means the program 
of projects and activities to be carried out by the applicant with 
funds provided annualK under this Subchapter and other 
resources. 

(f) "HUD" means the U.S. Department of Housing and Urban 
Development. 

(g) "Local Government" means any unit of general erty 
municipal or county government in the State. 

(h) "Low-Income Families" means those with a famiK income 
of 50 percent or less of median-family income. For purposes of 
such ternis. the area involved and median income shall be 
determined in the same manner as provided for under the Act. 

(i) "Moderate-Income Families" means those with a family 
income greater than 50 percent and less than or equal to 80 
percent of median-family income. 

(j) "Low and Moderate Income Persons" means members of 
families whose incomes are within the income limits of low and 
moderate income families as defined in Paragraph Paragraphs 
(h) and tU of this Rule. 

(k) "Metropolitan Area" means a standard metropolitan 
statistical area, as established by the U.S. OtTice of Management 
and Budget. 

(1) "Metropolitan City" means a citN as defined b\ Section 
102(a)(4) of the Act. 

(m) "Department" means the North Carolina Department of 
Economic and Community D e v e lopm e nt. Commerce (DOC) . 

(n) "Project" means any Indu s tria l Proj e ct or Industrial 
Proc e ssing Facility eligible business as defined in Paragraph (o) 
of this Rule and which the Economic Development Grant sector 
of the CDBG Program ma\ consider so long as th e > ar e 
se parab le , id e ntifiabl e and dir e ct l y cr e at e or retain jobs, the 
project business (or businesses) presents separate, identifiable 
opportunities to create or retain jobs. principalK for low and 
moderate income people. Such jobs must be created within the 
grant period. 

(o) "Industrial Project" or "Industrial Proc e ssing Facil i ty" 
shall m e an any land, e quipment or any buildings or oth e r 
s tructur e s, wh e th e r or not on the sam e sit e or sit es , and any 
r e habilitation, improv e m e nt, r e novation or e nlarg e m e nt of or 
any add i tion to, any building or s tructur e for us e as or in 
conn e ction with any: The follow ing definitions apply regarding 
eligible business types for projects for which CDBG assistance 
is requested: 

f44 i ndustr i al proj e ct for indu s try, which proj e ct may b e 
an\ indu s trial or manufacturing factory, mi ll ass e mbly 
plant or fabricating plant, or fre i ght terminal, or 
industrial r e s e arch d e v e lopm e nt or l aboratory facility. 



or indu s trial proc e ssing facility or distribut i on facility 
for indu s trial or manufactur e d products; or 

( 1 ) All business types identified as eligible for New and 
E.xpanding Business tax incentives under the North 
Carolina William S^ Lee Quality Jobs and Business 
Expansion Act (G.S 105-3A). as amended; and 

(3^ any pollution control proj e ct for industr> or for publ i c 
utiliti e s which proj e ct may b e any air pollution control 
facility, wat e r pollution control facility, or s olid wast e 
disposal facility in conn e ction with any factory, mill 
or p l ant described in Subparagraph (p)(l) of this Rul e 
or in conn e ction with a public uti l ity plant; or 

{i) any — combination — of — proj e cts — m e ntioned — m 
Subparagraphs (p)(l) and (p)(2) of this Rule. — Am 
proj e ct may includ e all appurt e nanc e s and incid e ntal 
faciliti e s — s«eh — as — land. — h e adquart e rs — or — offic e 
faci li t ie s. war e hou ses , di s tribution c e nt e rs, sid e walks, 
utiliti e s. — railway — s idings. — trucking — and — similar 
faciliti es , parking faciliti e s, landing strips and oth e r 
faciliti e s for aircraft, wat e rways, docks, wharv e s and 
oth e r improv e m e nt s n e c es sary or conv e ni e nt for th e 
construction, maint e nanc e and op e ration of any 
building or s tructur e , or addition th e r e to. 

(2) Other project businesses that provide public benefit 
and can reasonably be inter preted as being eligible for 
CDBG assistance under sections 105(a)( 14) and 
105(a)(17) of the Housing and Community 
Development Act of 1974. as amended. (Also see 
Rule .0105 of thjs subchapter regarding projects not 
to be considered for funding in NC) 

(p) "Utility Project" shall mean any water, sewer, electric or 
natural gas utility improvement needed to provide services to the 
economic development project. The applicant shall delineate 
which projects are to be owned and operated by a unit of 
government, which projects are to be owned by a unit of 
government and leased to an operating utility company, and 
which projects are to be owned and operated by a private utility 
company. Wh e n e v e r a utilit\ proj e ct i s own e d b\ a unit of 
gov e rnm e nt and l e a se d to a privat e utility op e rator, th e r e will b e 
a determination b\ th e applicant as to th e point and tim e wh e r e 
th e utility proj e ct s hal l b e acquir e d b\ th e privat e op e rator. At 
that tim e , the proj e ct s hall be acquir e d by th e privat e op e rator 
onc e it has grown or d e v e loped to th e point that it has what 
would b e d e t e nnin e d a s comm e rc i a l proj e ct f e asibility". Th e 
purpos e of this d e lin e ation will b e to hav e such utility proj e cts 
produc e Ad Valor e m tax incom e for th e local un i ts of 
gov e rnm e nt and add i tional mon e y to b e us e d by th e Stat e for 
n e w e conomic d e v e lopm e nt faciliti e s. If the project is for 
infrastructure which will be leased to and maintained by a 
privately owned and regulated natural gas distributor, the 
application will state the terms of the lease between the unit of 
government and the private entity. Such stated terms must 
include provisions as follows: 

( 1 ) natural gas lines constructed will be constructed to the 

safets requirements maintained b\ the distributor, and 
{¥) th e pr i vat e e ntity wi l l r e m i t l e as e paym e nts annual l y 

to the unit of governm e nt e qual to any mon e ys which 



13:8 



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October 15, 1998 



663 



PROPOSED RULES 



would — normalK — hav« — r e pr e s e nt e d — a — r e turn — te 
stoclcholders on lines constructed und e r normal 
busin e ss conditions, and 

(4-) th e private entit> \sili annual!} det e rmin e if th e l e as e d 

line has a positiv e n e t pre s ent \alu e . and wh e n that 
d e t e rmination i s made, th e privat e e nlit_\ will within 
90 days purchase the l e ased lin e at its cost of 
construction and. 

H4 th e unit of gov e rnm e nt will return thos e privat e 

mon e ys — te — the — D e partm e nt — of Economic — afid 



12} 



OJ 



determined bv the amount of (HUD) monev received 
in an\ one funding > ear: and 
(2) maximum dollar amounts for e ach project, the State- 
HUD approved program statement of operation for 
each respective CDBG program vear. Those program 
and project maximums are specifically set out jn the 
Grant .Agreement between the state and HUD and in 
the official program statement issued by the State and 
approved b\ HUD. 
(b) This Rule will s e t both program and proj e ct maximum 



Community D e v e lopm e nt and then to an e conomic dollar limits shall b e thos e s e t out in the e ff e ctiv e and approved 



d e v e lopm e nt rotating fund s e t up to financ e n e w 
natural ga s lin e s for industry or industrial proc e ss 
us e rs which wil l cr e at e or retain job s for North 
Carolina citizens. 

the natural gas distributor will calculate annually, m 
January of each vear. the Net Present X'alue INPV) of 
the project gas facilities according to the X C 
Depunmenr of Commerce CDBG Prosram Policy z 
Resale of Gas Lines of June. 1994. as amended. If the 
calculation of the NPV is positive, the unit of local 
gov ernment that was awarded CDBG funds for the 
project is obligated to seii and tlie natural gas 
distributor will, subject to ifie approval of tfie North 
Carolina Utilities Commission (NCUC). purchase the 
facilities at thie depreciated book value (computed 
using the depreciation fomtula most recently allowed 
by the NCUC for that natural gas distributor for 
similar facilities). 

In the case of such sale, the unit of local government 
will return to ifie DOC for deposit in an economic 
development revolving fund the proceeds of the sale. 
less such appropriate direct expenses, such as legal or 
advertising fees, that the unit of government expended 
in the execution of the sale. 



grant agr ee m e nt from HL D and the approved Official Stat e m e nt 
from th e Stat e of North Carolina. — If proj e cts have suffici e nt 
m e asurabl e impact and comm uni ty b e n e fits, e sp e cially to low 
and mod e rate incom e p e opl e , both citv and countv gov e rnm e nts 
with jurisdiction ma> apply — for s e parat e proj e ct grants in 
amounts up to th e p e rmitt e d maximum e conomic d e v e lopment 
Proj e ct limitation. .An e xampl e of th i s situa tion would b e wh e n 
a city applies for a grant to build a wat e r tank for a prosp e ctiv e 
e mploy e r and a countv appli e s for a grant to build a natural gas 
lin e for th e sam e e mploy e r. Each gra nt mav be in amounts up to 
proj e ct limits but it should b e not e d that such a proj e ct must hav e 
suffici e nt b e n e ficial impact to Justify th e total commitment of 
funds, 
(c) "Suffici e nt b ene ficial impact" v\ill b e m e asur e d bv : 

(4-) obs cr e ated or r e tain e d, e sp e cially — for low — and 

mod e rat e incom e p e ople: 

(2-) r e v e nues f or un i ts of governm e nt: and 

fj^ solutions to local e conomic program d e velopment 

n ee ds and probl e ms. Th e r e lativ e dollar d e mands of 



p e nding proje ct s 



b e compar e d to communirv 



b e n e fits and communirv hardships or distr e ss wh e n 
worthy applications e xc ee d fund availability. 

AiiihonnG.S. 143B-43I: 24C.F.R. 5'0.489: 42 i.S.C.A. 5301. 



AiilhonnG.S. 105-3A: 143B-43I: 24 C.F.R. 5'0.489. 

.0103 ELIGIBLE .APPLICANTS 

(a) .All counties except those designated as urban counties and 
all cities except those designated as entitlement cities or urban 
county cities may be applicants under this Economic 
Development Program. 

(b) Eligibility to submit an application shall depend upon an 
applicant's atidH — history of administ e ring its prior HUD 
programs and its curr e nt participation in proj e cts which ar e 
fund e d from th e curr e nt annual grant award from HUD. 
satisfactory administrative performance with present or prior 
CDBG program projects. .A letter of certification of eligibility 
from the Div ision of Community .Assistance shall be ev idence of 
eligibility. 

AiiihontxG.S. 143B-431: 42 i.S.C.A. 5301. 

.0104 FUNDING LLMITATIONS 

(*t Economic Development Grant awards are limited bv: 
( 1 ) maximum dollar amounts for each unit of gov ernment 



.0105 PROJECTS NOT TO BE CONSIDERED FOR 
FUNDING 

(a) Projects that have evidence of prior major financial 
commimtent bv the local government applicant or the proposed 
project business. .After an operator or beneficiary becomes 
economically committed to a project, it shall not be eligible for 
funding and the unit of government shall not be eligible to 
request anv funding assistance to serve that project with utiliti e s. 
utilities or CDBG loan assistance. "Economic commitment" is 
not a quantitative measure, but those tvpes of prohibited 
situations shall include the following: 

( 1 ) when construction contracts hav e been signed: 

(2) when equipment purchase orders for site specific 
installations have been issued: 

(3) when true, simple options for the purchase of an 
existing facility are bound with deposits that are so 
large that the option constitutes a sales contract: 

(4) when conditions or contingencies in a contract of sale 
have all been met: or 

(5) when public announcements include no expression of 
the need for CDBG participation. As provided in a 



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October 15. 1998 



13:8 



PROPOSED RULES 



£3} 



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15J 



governing board for the unit of government, or an authorized 
d fiign ee and designee, a corporate official, or authorized 
designee, from the employer or b e n e ficiary, project company . 
In addition, invite e s to th e pr e appl i cation conf e r e nc e must 
includ e th e Community Assistanc e Division, th e Divi s ion of 
Environm e ntal Manag e m e nt, th e a staff m e mber from the 
R e gional Official from of th e Busin e ss/Industry Division, th e 
Environm e ntal Sp e cialist in th e Busin e s s /lndustr> Division^ and 
th e a r e pr e s e ntativ e from th e Local Gov e rnm e nt Commission. 
and a representative from a participating bank zi if the proposed 
project will involve a loan and a bank has been selected . 

(c) The purpose of the conference is to ensure that the 
application procedures are clearly understood so that the 
application. v\hen acc e pt e d, will be complete complete , th e r e by 
short e ning the application p e riod as much as pos s ibl e , when 
submitted and aH parties involved will be made aware of the 
application process and its anticipated time frame. 

(d) The operator shall offer written project descriptions 
whenever possible and will be encouraged to provide data 
relative to the character and volume of process wastes, water and 
air discharges of pollutants, as well as any comment or permits 
already received from the Division of Environmental 
Management. 

(e) The applicant will provide documentation of the first 
f e d e rally required program public hearing if such a public 
hearing has been held w ithin the provisional 12 most recent six 
months. 

(0 Anoth e r purpos e of this conf e r e nc e will b e to r e ach an 
und e rstanding among all parti es that th e proj e ct is of the typ e 
Aiithohn- G.S. 143B-43I: 24 C.F.R. 5''0.489: 42 U.S.C.A. 5301. that may b e consider e d for approval and funding by th e 

Sf cr e tarv'. The Department will make net no d e cisions, how e v e r 
t . - ntative. funding decision regarding a prospective project prior 
to a full consideration of the completed application. However, 
the Commerce Finance Center may issue a Letter of 
Encouragement or a Letter of Concerns if so requested by the 
unit of government. This letter will convey comments pertinent 
to the project and the preparation of the application and will 
enumerate an\ points of concern which are developed as a result 
of the information made available at the conference. These 
points of concern will be generated so that the applicant's 
response may include pertinent facts and data. The issuance of 
a letter of encouragement will not preclude the Secretary or the 
Commerce Finance Center from raising new questions or areas 
of concern after an application is received. 



later section, a unit of government may request a letter 

of non-prejudice to solve this problem. 

(b) Proposed projects that are specifically prohibited by 

current State and HUD rules due to lack ot" public benefit and 

potential failure to meet required program objectives. Examples 

of such projects include those that would: 

( I) provide general, non-specific promotion of a 
community as a whole; 
assist professional sports teams: 
assist privatelv-owned recreational facilities that 
would serve a predominantly higher-income clientele, 
where such recreational benefit clearK outweighs 
employment or other benefits to LMI persons: 
acquire land for which no specific purpose has yet 
been identified: or 

assist a for-profit business while that business or any 
other business owned b\ the same person, persons or 
entity js the subject of unresolved findings of non- 
compliance relating to present or previous CDBG 
assistance provided b\ the applicant. 
In ord e r to pi - vide local un i t s of gov e rnm e nt s with a tim e and 
m e thod of tran s it i on, any project which has been revi e w e d in a 
pr e application conf e r e nc e and has been th e subj e ct of a 
favorabl e L e tt e r of Encourag e m e nt will b e grandfath e r e d a s to 
e ligibility unti l D e c e mb e r 31. IQ02. If th e proj e ct will not b e 
compl e t e d by that dat e th e grant shall b e r e writt e n to r e fl e ct a 
practical c l osing dat e and th e Comm e rc e Financ e C e nt e r s o 
notifi e d by r e gist e r e d mail. 



SECTION .0200 - APPLICATION PROCEDURE 

.0202 PRE-APPLICATION CONFERENCE 

(a) Local units of government are encouraged to advise the 
Department when they enter into serious consideration of an 
economic development project which may lead to an application. 
The Department will assist the communirs as requested within 
the limits of available resources. Docum e ntation. Technical 
advice, liaison and coordination will be effected by the 
Department through the Commerce Finance Center Available 
services include: 

(1) fomis and documents relating to the application 
process w ith informative comments. 

(2 ) comm e nt advice on the t>pe of projects consummat e d 
by oth e r authoriti es , that are considered eligible for 
CDBG program assistance. 

(3 ) examination of and comment on. assembled facts and 
data which might be used in the preparation of 
application, and 

(4) analysis of approach to likely or potential procedural 
or environmental problems. 

(b) At l e ast on e w ee k prior Prior to submission to the 
Department of a project application, the unit of government shall 
arrange for a pre-application conference with the Commerce 
Finance Center Parties whose presence are required at the pre- 
application conference shall include a member of the elected 



Auihority G.S. I43B-43I: 24 C.F.R. 5-0.489: 24 C.FR. 
570.496. 

.0203 APPLICATIONS 

Each Applicant that proceeds with a formal application shall 
take the following steps: 

(I) It is suggested but not required that the applicant 
employ or designate an application preparer and 
service provider for its application. If applicable, 
federal procurement guidelines will be followed. 
Documentation of compliance or non-applicability 
will be provided to the Commerce Finance Center. 



13:8 



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October 15, 1998 



665 



PROPOSED RULES 



(2) The applicant is encouraged to proceed with three 
critical areas of the application as follo\ss: 

(a) the environmental assessment, or the state 
clearing house hou se , review process. 

(b) the detemiination of Da\ is-Bacon applicabilitv 
and the pertinent wage decision, and 

(c) the second project specific public hearing. 
f^ Bas e d on th e salisfactorx compl e tion of the three 

cr i tica l e l e m e nts in It e m (2) of this Rul e and th e actual 
s ubm i ssion of th e app l ication to th e D e partm e nt, th e 
unit gov e rnm e nt max — r e qu es t a letter of "Non 
Pre j udi ce". In that l e tt e r, th e D e partment max stat e 
that th e unit of gov e rnm e nt or th e pot e ntial e mplox e r 
max b e g i n to mak e commitments and e xp e nditur e s on 
tlw — proj e ct — xxithoul — cau s ing th e — D e partm e nt to 
pr e judic e its consideration of project approval and 
proj e ct funding b e caus e of such e xp e nditures. This 
le tt e r i s n o t t o be constru e d as proj e ct approxa l . an 
indicat i on of approval or anx priorirx in th e al l ocation 

of funds. Th« — le tt e r \\\\\ — conx e x — the critical 

und e r s tanding that anx monex so sp e nt is sp e nt at th e 
r i sk of the unit or the b en eficiarx e mplox e r. and that 
th e D e partm e nt acc e pts no r e al, moral or impli e d 
liability — for such sp e nding funds, or for loss e s 
s ustain e d because funds w e r e so exp e nd e d. 

f44(3) All applications for CDBG funds, irr es p e ct ive o f the 
F e d e ral thr e shold of tx\o hundr e d thousand dollars 
(S200.000 ) . funds will include a disclosure report. 
Such report, in addition to requesting identit\ing 
information and the amount of funds requested, will 
disclose whether or not. and the extent, to xvhich 
interested parties have a financial interest in the 
application. Interested parties include developers, 
contractors, consultants, indix iduals. entities including 
units of government with a financial interest greater 
than fift\ thousand dollars (S50.000) or 10 percent of 
the assistance requested, whichexer is loxver. 
AdditionalK. the report x\ill show anx sources and 
uses of funds for the project which are not identified 
in the application's sourc e s and us e d source and use of 
funds statement. 

f^4(4) The unit of goxernment will complete its application 
on forms dex eloped bx the Department and made 
axailable bx the Commerce Finance Center. 

f#^(5) An\ application xvhich has incomplete factual data or 
lacks suftlcient detail w+H max be returned to the «ftrt 
applicant x\ith specific reasons for the return being 
stated in writing. Upon receipt of the requested 
information a proc ess ing number will be assigned and 
consid e ration the Department's rex iew of the 
application xvill be completed. 
(6) In the exent that an a pplication js receixed at a time 
xxhen current xear fundin g js no longer axailable (all 
funds haxe been allocated), the Department will so 
adxise the applicant of the fundina status. Mx mutual 
agreement betxxeen the applicant and the Department. 
the application mav be retained by the Department for 



final rexiexx of the application and the proposed 
project when CDBG program funds are available. m 

Authority G.S. 143B-431: 24C.F.R. 5''0.4S9: 42 L'.S.C.A. 5301. 

.0204 DISCRETIONARY PUBLIC HEARING BY 
THE DEPARTMENT 

(a) The Secretarx max hold a public hearing on the proposed 
project. 

(b) if a public hearing is held, the applicant shall gixe at least 
s e v e n 10 daxs notice prior to the hearing. The notice shall 
specifx the date. time, place and subject matter of the hearing 
and be published in a the non-legal section of a newspaper of 
general circulation in the applicant's counrx. 

(c) A transcript of the hearing shall be prepared bx the 
Secretarx and. along w ith anx exhibits, made a part of the 
application. 

Aiilhoritr G.S. I43B-431: 42 U.S.C.A. 5301. 



.0205 FORMAL APPLICATION PROCEDURES: 
APPROVAL 

(a) The Secretarx shall prepare a Letter of Approxal and 
Grant Offer setting forth all findings and grant conditions. 

(b) Th e S e cr e tarx shall designate the unit of government, the 
e mplox e r. or the D e partment to publish notic e of approxal of th e 
grant in a n e xxspap e r having g e n e ral circulation in th e proj e ct 
ar e a. Th e notic e sha ll sp e cify th e Job s cr e at e d or r e tain e d and a U 
contact for emploxm e nt applications. 

(b) The chief elected official who signed the original 
application w ill be the addressee of the Letter of Approval and 
Grant Offer from the Secretarx. 



Aiithorit}- G.S. I43B-431: 42 U.S.C.A. 5301. 

.0206 FORMAL APPLICATION PROCEDURES: 
DENIAL 

(a) The Secretarx shall indicate in writing the reasons for 
denial of an application. 

(b) The Secretarx- shall indicate in writing that the unit of 
goxernment is invit e d to max prepare a presentation, either 
xxritten or oral xvhich speaks factuallx to the unresolxed issues. 
The Secretarx or designee shall be present at the meeting to hear 
and discuss the issues xxith the unit of goxernment. It shall be 
the responsibilitx of the unit of government to persuade the 
Secretarx that all the necessarx findings should be made. 

(c) Where the unit of goxernment does accomplish its 
responsibilitx to persuade the Secretarx. further procedures shall 
be as in Rule .020.^ of this Section. 

(d) Where the unit of goxernment does not accomplish its 
responsibility to persuade the Secretarx. the Secretarx shall 
notif\ the unit of goxernment the decision in xxriting. again 
specifx ing the reasons for denial. 

Authority- G.S. 1438-431: 24 C.F.R. 5'0.4S9: 42 U.S.C.A. 5301. 



666 



NORTH CAROLINA REGISTER 



October 15. 1998 



13:8 



PROPOSED RULES 



SECTION .0300 - FINDINGS REQUIRED FOR 
APPROVAL 

.0301 GENERAL 

In order to approve a project it is necessar>' for the Secretary 
to find that: 

(1) the project will have a measurable beneficial and 
desirable impact on the community, 

(2) that the funding for the project is appropriate under 
state and federal rules and guidelines for the 
Community Development Block Grant programs. 

Aulhorin-CS. I43B-431: 24 C.F.R. 5-0.489: 42 U.S.C.A. 5301. 

.0302 CRITERIA FOR MAKING NECESSARY 
FINDINGS 

The Department shall use certain criteria for making the 
approval findings, as follov\s: 

(1) it must be determined that the op e rator project 
business is capable of op e rating — the — proj e ct 
completing jts proposed project activities in a 
successful manner. Capable means that there is a 
business histor>. a financial condition, or other 
outstanding business qualifications which support the 
conclusion that the entity op e rating th e project 
business is capable of operating It in a successful 
manner; 

(2) that the project is identifiable and s e parabl e free- 
standing, with its own measurable an J significantly 
beneficial impact. Identifiable and s e parabl e free- 
standing means a project which can literally be 
separated out and specificallv' identified and 
detemiined as the project being discussed, and as such 
will have its ovsn measurable and significantly 
beneficial impact: result at the project location: 

(3) that the project v\ ill be completed. The provision of 
legally binding commitments from the grantee and the 
beneficiarv employer or employers will be sufficient 
evidence that the project is to be completed; 

(4) that there is a substantial benefit to persons of low and 
moderate incom e , income, or to n e ighborhoods wh e n 
census tracks or surv e vs docum e nt numbers of low 
and mod e rat e incom e r e sid e nts. Substantial benefit to 
persons of low and moderate income mav be 
evidenced by employer commitments to assure that 
60°o and no l e ss than 51% of jobs created or saved 
will be held bv persons of prior low and moderate 
incom es ; familv income status; b e nefits to low and 
moderat e incom e n e ighborhoods can b e e vid e nc e d by 
unan i mous actions of th e e l e ct e d board of tho se unit s 
of governm e nt having juri s diction; 

(5) that there is a favorable and — strong ratio or 
relationship bet\veen the jobs created and the number 
of CDBG dollars invested in the project. Favorable 
and strong will mean that a project will create or 
retain jobs at a rate equal to a ratio of on e or mor e 
jobs p e r fiv e thousand dollar s (S5.000) of CDBG 



mon e v. or. at a rat e equal to a ratio of on e or more 
jobs p e r fifteen thou'-and dol l ar s ($15,000) of CDBG 
mon e y when eith e r, the unit of gov e rnm e nt match e s 
CDBG mon e y at a rate of one local tax dollar for e ach 
throe CDBG dollar s , or. wh e n th e proj e ct is a 
manufacturing plant or an — industrial processing 
faci li tv'; of CDBG dollars required for the type of 
project company involved, and the local government 
has committed to meet the local to CDBG match 
requirement as required by current program rules and 
policies for the project type proposed; 
that there is a favorable and — strong — Fatie — er 



(6) 

relationship between the total dollars invested in the 
project, the amount of CDBG money invested, and the 
m e asur e d — or r e tain e d — Ad — Valor e m — ta?v — incom e 
anticipated taxes or other revenues to either or both 
e+ty the municipality and county having taxing 
authority and jurisdiction; Favorabl e and strong 
m e ans that a proj e ct wil l cr e at e or r e tain r e v e nu e such 
as Ad Valor e m tax r e v e nu e or dir e ct sal e s tax e s, or 
oth e r gov e rnm e nta l utility op e rating profits such tax es 
or r e v e nu e s that w i l l e ith e r: 

-fa^ i n th e cas e of an infrastructur e grant, e qual th e 

cost of th e infrastructur e grant ov e r a p e riod of 
tim e of no l e ss than 12 y e ar s or contribute 
significantly to th e propo se d infra s tructur e 
costs within a p e riod of fiv e y e ars; . e xc e pt that 
in th e cas e of a proj e ct locat e d in a "most 
e conomica ll y di s tr e ss e d" county, as defin e d in 
G.S. M3B '1 37A(b). this requirement may be 
waiv e d by thr S e cretary; or 

(¥) i n th e cas e ' 'a loan proj e ct, that will equal th e 

maximum l o s s e xp e ct e d in such proj e cts (a sum 
e qual to 25% of th e CDBG funds inv e st e d) in 
a p e r i od of tim e of no l e ss than 12 y e ars; 

{Tj that th e r e is a favorabl e and strong r e lationship 

b e tw ee n th e numb e r of jobs sav e d or cr e at e d and th e 
un e mploym e nt situation in th e unit or unit s of 
gov e rnm e nt impact e d. — Favorab le and strong m e ans 
that the labor poo l in the county is at l e ast thr ee tim e s 
a s larg e as th e number of jobs creat e d; 

(7) in terms of jobs to be created (or retained), the NC 
Enterprise Tier or Development Zone designation 
level of" the project site will be considered for each 
application, along with the latest unemployment 
figures and impact on the actual number of 
unemployed persons. To the extent feasible, priority 
consideration will be given for CDBG assistance for 
projects in tlie most distressed areas of the state; 

(8) that th e n e c e ssary e xt e nt of required compliance with 
federal and state guidelines and legal requirements has 
been must be documented. The extent of 
documentation required will be that as considered as 
reasonable by a prud e nt per s on; and the Director of 
the Commerce Finance Center; 

(9) if the project is si milar to th e r e tail or service 
establishments d e scrib e d in th e 1987 North Carolina 



]3:8 



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667 



PROPOSED RULES 



Gen e ral Ass e mbly R e solution in S e c. 6. Hous e Bill 
2055. th e Secr e tan shall stat e th e ba s i s for th e 
approval in th e fac e of thos e conc e rn s e xpre sse d. 
involves retail, service or other local market business. 
the W>e — S e cretan shall con s id e r application shall 
include sur\ e\ s or other market studies as e\ idence 
that similar businesses in the 15-25 mile labor work 
force area support the project and that the project will 
not jeopardize the jobs in their businesses: and 
that the application presents evidence for a finding 
that the local government applicant, or the project 
business jn the case ot'a loan project, has a reasonable 
and appropriate gap or need for the CDBG assistance 
requested. 



Author in- (J.S^ 105-3.4: 
U.S.C.A. 5301. 



143B-43I: 24 C.F.R. 5'0.4S9: 42 



SECTION .0400 - GRANT ADIV1INISTR.4TION 

.0401 GRANT AGREEMENT AND FUNDING 
APPRONAL 

When the Secretarv appro\es the project, an offer of the grant 
agreement and funding appro\al and all modifications will 
accompany and be attached to the communication of project 
appro\al. When the grant agreement is recei\ed bv the unit of 
go\emment. it will be signed and returned to the Department ft>F 
th e S e cr e tarv 's signatur e . Wh e n sign e d bv all parti e s, it and will 
be deemed to be effecti\e. 

Auihorin- a..S. I43B-43I: 24 C.F.R. 5^0.489. 

.0402 METHOD OF PAYMENT 

Recipients will receive pa>ments based on requisitions 
submitted for immediate disbursing needs as and approved b\ 
the Department. Exc e pt for th e closing r e quisition, all such 
r e qu e sts shall b e for at l e ast fiv e thousand dollars (S5.000). No 
funds will be kept on deposit for more than three banking davs 
by the local government grantee. If for anv reason the grant 
costs for which funds were requisitioned cannot be paid as 
intended w ithin three davs. davs. the local government' fmance 
officer shall return the unused funds or contact the Commerce 
Finance Center for special instructions. 



.AiahoriT}- U.S. 
5304ig). 



I43B-431: 24 C F.R. 5'0.489: 42 U.S.C.A. 



.0404 MONITORING AND GRANT CLOSE OUT 

The Commerce Finance Center shall pro\ ide copies of the 
fomis and documents needed to fulfill grant requirements in an 
annual performance report and in a final grant close out audit. 
Location \ isits and conferences w ith benefiting eniplovers shall 
be conducted b> the Commerce Finance Center Center, and th e 
r e gional — offic e s of th e — busin ess — and — industry — Divi s ion. 
Wh e n e v e r possibl e th e \ i s it s s hall b e m ade w i th th e support and 
pr e s e nc e of th e l ocal e conomic dev el opm e nt r e pr e s e ntativ e and 
both visits shal l b e combin e d i nto on e s es sion wh e n e v e r 



po ss ibl e . A minimum of one on-site visit for monitoring 
purposes bv Commerce Finance Center staff is required before A 
the active grant agreement between the State and the local ~ 
government grantee can be closed. 

AiilhnrirvG.S. 143B-431 : 24 C FR 5~i)4S9. 



TITLE 10 - DEPARTMENT OF HEALTH AND 
HUMAN SERVICES 

Notice is hereby given in accordance with G.S. 1 50B-2L2 
thai the DHHS - Division of Medical .Assistance intends to 
amend rule cited as 10 \C.4C 26H. 0304. 

Proposed Effective Date: April I. 1999 

A Public Hearing will be conducted at 1 :30 p.m. on Sovember 
5. 1998 at the 1 985 Umstead Dr.. Room 132. Kirby Building. 
Raleigh. \C. 

Reason for Proposed .4ction: Fhe Division ofFacilit}- SeiTices 
has cited many ICF-MR facilities as needing fire sprinkler 
systems. In addition, providers recognize the need for 
installation of said svs terns . 



Comment Procedures: Written comments concerning this ^ 
rule-making action must be submitted by Sovember 16. 1998 to ^ 
Portia W. Rochelle. Rule-making Coordinator Division of 
Medical .Assistance. 1985 Umstead Drive. Raleigh. AC 2 '603. 

Fiscal Note: This Rule does affect the expenditures or revenues 
of state and local government funds. This Rule does not have a 
substantial economic impact of at least five million dollars 
(S5. 000.000) in a 12-month period 



SUBCHAPTER 26H - REIMBURSEMENT PLANS 



SECTION .0300 



ICF-MR PROSPECTFVE RATE 
PLAN 



.0304 R.\TE SETTING METHOD FOR NON-STATE 
FACILITIES 

(a) A prospective rate shall be determined annualK tor each 
non-state facility to be effective for dates of service for a 12 
month rate period beginning each .lulv 1 . The prospectiv e rate 
shall be paid to the provider for even. Medicaid eligible dav 
during the applicable rate vear. The prospective rate mav be 
determined after the etTective date and paid retroactivelv to that 
date. The prospective rate mav be changed due to a rate appeal 
under Rule .0308 of this Stat e Plan Section or facilitv 
reclassification under Paragraph (b) of this Rule. Each non-state 
facility, except those facilities where Paragraph (v) of this Rule 
applies, shall be classified into one of the following groups: 

( 1 ) Group I - Facilities with 32 beds or less. 

(2) Group 2- Facilities with more than 32 beds. 



668 



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October 15. 1998 



13:8 



PROPOSED RULES 



(3) Group 3- Facilities with medically fragile clients. For 
rate reimbursement purposes under this Rule 
medicalK fragile clients are defined as any individual 
with complex medical problems who have chronic 
debilitating diseases or conditions of one or more 
ph> siological or organ systems which generally make 
them dependent upon 24-hour a day 
medical/nursing/liealth supervision or intervention. 

(4) Facilities in group 1 or 2 in Subparagraph (a)( 1 ) or (2) 
of this Rule shall be further classified in accordance 
to the level of disability of the facility's clients, as 



measured by the Developmental Disabilities Profile 
(DDP) assessment instrument which along with the 
scoring instrument are hereby incorporated by 
reference, including subsequent amendments and 
editions. This material is available for inspection and 
copies may be obtained from the Division of Medical 
Assistance. 1985 Umstead Drive. Raleigh, North 
Carolina 27603 at a cost of twenty cents ($.20) per 
page. A summarv' of the levels of disability' is shown 
in the following chart; 



FACILITY DDP SCORE 



Level 



Low 



Hish 



1 

2 
3 
4 

5 



200.00 


300.00 


125.00 


199.99 


100.00 


124.99 


75.00 


99.99 


50.00 


74.99 



(b) Facilities shall be reclassified into appropriate groups as 
defined in Paragraph (a) of this Rule. 

(1) When a facility is reclassified, the rate shall be 
adjusted retroactively back to the date of the event 
that caused the reclassification. This adjustment shall 
give full consideration to any reclassification based on 
the change in facts or circumstances during the year. 
0\erpa\inents related to this retroactive rate 
adjustment shall be repaid to the Medicaid program. 
Underpa\'ments related to this retroactive rate 
adjustment shall be paid to the provider. 

(2) The provider shall be given the opportunit\ to appeal 
the merits of the reclassification of any facility, prior 
to any decision by the Division of Medical 
Assistance. 

(3) The provider shall be notified in writing 30 da>s 
before the implementation of new rates resulting from 
the reclassification of an\' facility. 

(4) The providers and the Division of Medical Assistance 
shall make every reasonable effort to ensure that each 
facility is properK classified for rate setting purposes. 

(5) A provider shall tile an\ request for facility 
reclassification in writing with the Division of 
Medical Assistance no later than 60 days subsequent 
to the proposed reclassification effective date. 

(6) For facilities certified prior to July 1, 1993. the 
facility DDP score calculated for fiscal \ear 1993 
shall be used to establish proper classification at July 
I. 1995. 

(7) For facilities certified after June 30. 1993. the most 
recent facilitv DDP score shall be used to establish 
proper classification. 

(8) A facility reclassification review shall use the most 
current facility DDP score. 

(9) A facility's DDP score shall be subject to independent 



validation by the Division of Medical Assistance. 
(10) A new facilitv that has not had a DDP survey 
conducted on its clients shall be categorized as a level 
2 facility for rate setting purposes, pending 
completion of the DDP survey. Upon completion of 
the DDP survey, the facility shall be subject to 
reclassification and rates shall be adjusted 
retroactively back to the date of certification. 
Overpayments related to this retroactive adjustment 
shall be paid to the Medicaid program. 
Underpa\ments related to this retroactive rate 
adjustment shall be paid to the provider, 
(c) FacilitN rates under this Rule shall be established at July 
. 1995. under the following: 

( 1 ) For facilities certified prior to July 1 . 1 993. rates shall 
be derived from the 1993 cost reports. 

(2) For facilities certified during fiscal year 1993-1994, 
the fiscal year 1994 facility specific cost report shall 
be used to derive rates. 

(3) For facilities certified during fiscal year 1994-1995. 
the fiscal \ear 1995 facility specific cost report shall 
be used to derive rates. 

(A) Rates for these facilities shall not be adjusted, 
except for the impact of inflation under 
Paragraph (k) of this Rule, until the fiscal \ear 
1995 cost report has been properly reviewed. 
Rates for these facilities shall be adjusted 
retroactively back to July I. 1995. once the 
fiscal year 1995 facility specific cost report has 
been properly reviewed. Overpa> ments related 
to this retroactive rate adjustment shall be 
repaid to the Medicaid program. 
Underpayments related to this retroactive rate 
adjustment shall be paid to the provider. 

(4) Facilities with rates established during a rate appeal 



13:8 



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October 15, 1998 



669 



PROPOSED RULES 



proceeding with the Division of Medical Assistance 

during fiscal \ears 1994 or 1995 shall not have their 

rates established in accordance v\ith Subparagraph 

(cK I ). (cK2). or (c)(3) of this Rule. 

(A) The rates for these facilities shall remain at the 

level approved in the rate appeal proceeding 

adjusted only for inflation, as reflected in 

Paragraph (k) of this Rule. 

(d) For facilities certified after June 30. 1993. rates developed 
from tiled cost reports for fiscal \ears subsequent to 1993 may 
be retroactivcK adjusted if there is found to exist more than a 
two percent difference between the filed per diem cost and either 
the desk audited or field audited per diem cost for the same 
reporting period. Rates developed from desk audited cost 
reports ma\ be retroactiveK adjusted if there is found to exist 
more than a two percent difference between the desk audited per 
diem cost and the field audited per diem cost for the same 
reporting period. The rate adjustment ma> be made after written 
notification to the prov ider 30 davs prior to implementation of 
the rate adjustment. 

(e) Each prospective rate developed in accordance with 
Subparagraph (c)( 1 ). (c)(2). or (c)(3) of this Rule consists of the 
sum of two components as follows: 

( 1 ) Indirect care rate. 

(2) Direct care rate. 

(f) A uniform industry wide indirect care rate shall be 
established for each facility category shov\ n under Subparagraph 
(a)( 1 ). (a)(2). or (a)(3) of this Rule. 

(1) The indirect rate for group 1 facilities is based on the 
fiftieth percentile of the following costs incurred by 
all group 1 facilities with six beds or less, except 
those related by common ownership or control to 
more than 40 said facilities: 

(A) The sum of the cost of property ownership and 
use, administrative and general, and operation 
and maintenance of plant, as determined by the 
Myers and Stauffer study performed on the 
1 993 base year cost reports. 

(2) The indirect rate for group 2 facilities is based on the 
fiftieth percentile of the costs noted in Part (0(1 )(A) 
of this Rule incurred b\ the group 2 facilities, as 
determined by the Myers and Stauffer study 
performed on the 1 993 base \ ear cost reports. 

(3) The indirect rate for group 3 facilities is based on the 
fiftieth percentile of the costs noted in Part (0(1)(A) 
of this Rule incurred b> the group 3 facilities, as 
determined b\ the Myers and Stauffer study 
performed on the 1 993 base year cost reports. 

(4) The indirect rates established under Subparagraphs 
(f)( 1 ), (f)(2). and (f)(3) of this Rule shall be reduced 
as determined based on industry cost analysis by an 
amount not to exceed four percent to account for 
expected operating efficiencies. 

(g) The direct care rate for facilities certified prior to July 1, 
1993, shall be based on the M\ers and Stauffer studv performed 
on the 1993 base year cost reports. 

( I ) rhe direct care rate for all facilities certified during 



fiscal years subsequent to fiscal year 1 993 is based on 
the first facility specific cost report filed after A 
certification. Based on said cost report, the direct care T 
rate is equal to the sum of all allowable costs reflected 
in the ICF-MR cost report cost centers, as included in 
the ICF-MR cost report fonnat effective July 1, 1993, 
except for the following indirect cost centers: 

(A) Property Ownership and Use. 

(B) Operation and Maintenance of Plant and 
Housekeeping-Non-Labor, 

(C) Administrative and General. 

(2) The direct care rate shall be limited to the lesser of the 
actual amount incun-ed in the base year or the cost 
limit derived from the fiftieth percentile of direct care 
costs incuiTed b\ the related facility group in the fiscal 
year 1993 base \ear, based on the Mvers and Stauffer 
stud). 

(3) The fiftieth percentile cost limit shall be reduced b\' 
one percent each \ear. for the four year period 
beginning July I. 1996, in order to account for 
expected operating efficiencies, as detennined based 
on industn cost anaK sis. 

(4) The fiftieth percentile cost limit shall be increased 
each \ear by price level changes calculated in 
accordance with Paragraph (k) of this Pule. 

(h) The indirect rate shall not be subject to cosi ^ttlement. 

( 1 ) Costs above the indirect rate shall not be paid to the 
provider. A 

(2) Costs savings below the indirect rate shall not be ^ 
recouped from the provider. 

(i) The direct care rate shall be subject to cost settlement, 
based on the cost report, subject to audit, filed with the Division 
of Medical Assistance. 

(1) Costs above the direct rate shall not be paid to the 
provider. 

(2) Cost savings below the direct rate shall be recouped 
from the provider. 

(J) Facilities with rates established during a rate appeal 
proceeding with the Division of Medical Assistance during fiscal 
years 1994 or 1995 may choose to cost settle under the 
provisions of Paragraphs (h) and (i) of this Rule, or under the 
following procedure: 

( 1 ) If during a cost reporting period, total allowable costs 
are less than total prospective payments, then a 
provider may retain one-half of said difference, up to 
an amount of five dollars ($5.00) per patient da\. The 
balance of unexpended payments shall be refunded to 
the Division of Medical Assistance. Costs in excess 
of a facility's total prospective pavment rate are not 
reimbursable. 

(2) The facilities subject to the Paragraph shall make the 
election on cost settlement methodologv on or before 
the filing of the annual cost report with the Division 
of Medical Assistance. 

(3) An election to follow the cost settlement procedures 
of Paragraphs (h) and (i) of this Rule shall be 
irrevocable. 



670 



NORTH CAROLINA REGISTER 



October 15. 1998 



13:8 



PROPOSED RULES 



# 



(4) Rates established for these facilities during future rate 

appeal proceedings shall be subject to the cost 

settlement procedures of Paragraphs (h) and (i) of this 

Rule. 

(k) To compute each facilit)'s current prospective rate, the 

direct and indirect rates established by Paragraphs (f) and (g) of 

this Rule shall be adjusted for price level changes since the base 

year. No inflation factor for any provider shall exceed the 

maximum amount permitted for that provider b\ federal or state 

law and regulations. 

(1) Price level adjustment factors are computed using 
aggregate costs in the follow ing manners: 

(A) Costs shall be separated into three groups; 

(i) Labor, 
(ii) Non-labor, 
(iii) Fixed. 

(B) The relative weight of each cost group is 
calculated to the second decimal point by 
dividing the total costs of each group (labor, 
nonlabor. and fixed) b\ the total cost of the 
three categories. 

(C) Price level adjustment factors for each cost 
group shall be established as follows: 

(i) Labor The percentage change for labor 

.■> costs is based on the projected average 

t' ' hourK wage of North Carolina service 

workers. Salaries for all personnel shall 

be limited to levels of comparable 

positions in state owned facilities or 

levels specified b\ the Division of 

Medical Assistance. 

(ii) Nonlabor. The percentage change for 

nonlabor costs is based on the projected 

annual change in the implicit price 

deflator for the Gross National Product 

as provided by the North Carolina 

Office of State Budget and 

Management. 

(iii) Fixed. No price level adjustment shall 

be made for this categor>. 

(D) The weights computed in Part (k)(l)(B) of this 
Rule shall be multiplied by the rates computed 
in Part (k)( I )(C) of this Rule. These weighted 
rates shall be added to obtain the composite 
inflation rate to be applied to both the direct 
and indirect rates. 

(I) Effective July I. 1995. any rate reductions resulting from 
this Stat e Plan Rule shall be implemented based on the following 
deferral methodolog\': 

( 1 ) Rates shall be reduced for the excess of current rates 
over base year costs plus inflation. 

(2) Rates shall be reduced a maximum of 50 percent of 
the fiscal 1996 inflation rate for the excess of actual 
costs over applicable cost limits. This reduction shall 
result in the facility receiving at a minimum 50 
percent of the 1996 inflation rate. An_\ excess 
reduction shall be carried fonvard to future Nears. 



(3) Total reduction in future \ears related to the excess 
reduction carried forward ft-om Subparagraph (1)(2) of 
this Rule, shall not exceed the annual rate of inflation. 
This reduction shall result in the facilit\' receiving at 
a minimum the rate established in Paragraph (l)(2) of 
this Rule. Any excess reduction shall be carried 
forward to future years, until the established rate 
equals that generated by Paragraphs (f). (g)- and (k) of 
this Rule. 

(4) Rates calculated based on Subparagraphs (1)(2) and 
(3) of this Rule shall be cost settled based on the 
provisions of Subparagraph (j)(l) of this Rule until 
the fiscal year that the facility receives full price level 
increase undci Paragraph (k) of this Rule. 

(A) A provider may make an irrevocable election to 
cost settle under the provisions of Paragraphs 
(h) and (i) of this Rule during the deferral 
period. 

(B) Once the rates calculated based on 
Subparagraphs (I )( 2) and (3) of this Rule reach 
the fiscal >ear that the facilit>' receives the full 
price level increase under Paragraph (k) of this 
Rule, then said fiscal year's rates shall be cost 
settled based on Paragraphs (h) and (i) of this 
Rule. 

(C) Chain providers are allowed to file combined 
cost reports, for cost settlement purposes, for 
facilities that use the same cost settlement 
methodolog> and ha c the same uniform rate. 

(D) A provider may request from the Division of 
Medical Assistance permission to continue cost 
settlement under Subparagraph {j)(\) of this 
Rule after the deferral period expires. Said 
request shall be made each year, 30 days prior 
to the cost report due date. 

(m) The initial rate for facilities that have been awarded a 
Certificate of Need is established at the lower of the fair and 
reasonable costs in the provider's budget, as determined by the 
Division of Medical Assistance, or the projected costs in the 
pro\ ider's Certificate of Need application, adjusted from the 
projected opening date in the Certificate of Need application to 
the current rate period in which the facility is certified based on 
the price level change methodolog\ set forth in Paragraph (k) of 
this Rule, or the rate currenti) paid to the owning provider, if the 
provider currently has an approved chain rate for facilities in the 
related facilir\ categor>. The rate may be rebased to the actual 
cost incurred in the first full year of nonnal operations in the 
year an audit of the first year of nonnal operation is completed. 

( 1 ) In the event of a change in ownership, the new ov\ner 
receives no more than the rate of payment assigned to 
the previous owner. 

(2) Except in cases wherein the provider has failed to file 
supporting information as requested by the Division 
of Medical Assistance, initial rates shall be granted to 
new enrolled facilities no later than 60 days from the 
provider's tiling of properK prepared budgets and 
supporting information. 



13:8 



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October 15, 1998 



671 



PROPOSED RULES 



(3) The initial rate for a new taciiit\ shall be applicable to 
all dates of service commencing with the date the 
facilit) is certified b\ the Medicaid Program. 

(4) The initial rate for a new facility shall not be entered 
into the Medicaid pa\ment s\stem until the facilit\ is 
properly enrolled in the Medicaid program and a 
Medicaid identification number has been assigned to 
the facilit) b_\ the Division of Medical Assistance. 

(n) A pro\ ider vsith more than one facilit\ ma\ be allowed to 
recover costs through a combined uniform rate for all facilities. 

( 1 ) Combined uniform rates for chain providers shall be 
approved upon v\ritten request from the pro\ ider and 
after review by the Division of Medical Assistance. 

(2) In determining a combined uniform rate for a 
particular facility group, the weighted average of each 
facility's rate, calculated in accordance to all other 
provisions of this Rule, shall be used. 

(3) A chain provider with facility(s) that fall under 
Paragraphs (h) and (i) of this Rule and v\ ith facilit>(s) 
that fall under Subparagraph (l)(4) of this Rule ma\' 
elect to include the facilities in a combined cost report 
and elect to cost settle under either Paragraphs (h) and 
(i) or Subparagraph (l)(4) of this Rule. The cost 
settlement election shall be made each \ear. 30 da\s 
prior to the cost report due date. 

(o) Each out-of-state provider shall be reimbursed at the 
lower of the applicable North Carolina rate, as established by 
this plart Rule for in-state facilities, or the provider's per diem 
rate as established bv the state in which the provider is located. 
An out-of-state provider is defined as a provider that is enrolled 
in the Medicaid program of another state and provides ICF-MR 
ser\ ices to a North Carolina Medicaid client in a facility located 
in the state of enrollment. Rates for out-of-state providers are 
not subject to cost settlement. 

(p) Under no circumstances shall the Medicaid per diem rate 
exceed the private pay rate of a facility. 

(q) Should the Division of Medical Assistance be unable to 
establish a rate for a facility, based on this Rule and the 
applicable facts known, the Division of Medical Assistance mav 
approve an interim rale. 

(1) The interim rate shall not exceed the rate cap 
established under this Rule for the applicable facility 
group. 

(2) The interim rate shall be replaced bv a permanent rate. 
effective retroactive to the commencement of the 
interim rate. b\ the Division of Medical Assistance, 
upon the detemiination of said rate based on this Rule 
and the applicable facts. 

(3) The provider shall repav to the Division of Medical 
Assistance any overpavment resulting from the 
interim rate exceeding the subsequent permanent rate. 

(r) In addition to the prospective per diem rate developed 
under this Rule, effective .luK I. 1992. an interim pavment add 
on shall be applied to the total rate to cover the estimated cost 
required under Title 29. Part 191 0. Subpart 2. Rule 1 9 1 0. 1 030 
of the Code of Federal Regulations. The interim rate shall be 
subject to final settlement reconciliation w ith reasonable cost to 



meet the requirements of Rule 1 9 1 0. 1 030. The final settlement 
reconciliation shall be effectuated during the annual cost report ^ 
settlement process. An interim rate add on to the prospective ' 
rate shall be allowed, subject to final settlement reconciliation, 
in subsequent rate periods until cost historv is available to 
include the cost of meeting the requirements of Rule 1910.1030 
in the prospective rate. This interim add on shall be removed, 
upon 1 days v\rinen notice to providers, should it be determined 
b_\ appropriate authorities that the requirements under Title 29, 
Part 191 0. Subpart 2. Rule 1 9 1 0. 1 030 of the Code of Federal 
Regulations do not appiv to ICF-MR facilities. 

(s) All rates, except those noted otherwise in this Rule, 
approved under this Rule are considered to be permanent. 

(t) In the event that the rate for a facilitv cannot be developed 
so that it shall be effective on the first da> of the rate period, due 
to the provider not submitting the required reports by the due 
date, the average rate for facilities in the same facilitv group, or 
the facilitv 's current rate, whichever is lower, shall be in effect 
until such time as the Division of Medical Assistance can 
develop a new rate. 

(u) When the Division of Medical Assistance develops a new 
rate for a facilitv' for which a rate was paid in accordance with 
Paragraph (t) of this Rule, the rate developed shall be effective 
on the first dav of the second month following the receipt by the 
Division of Medical Assistance of the required reports. The 
Division of Medical Assistance may, i on its own motion or 
upon application and Just cause shown by the provider, within 60 
da\ s subsequent to submission of the delinquent report, make the ^ 
rate retroactive to the beginning of the rate period in question. 
Anv overpavment to the provider resulting from this temporary 
rate being greater than the final approved prospective rate for the 
facility shall be repaid to the Medicaid Program. 

(v) ICF-MR facilities meeting the requirements of the North 
Carolina Division of Facilitv Services as a facility affiliated with 
one or more of the four medical schools in the state and 
providing services on a statewide basis to children with various 
developmental disabilities v\ho are in need of long-term high 
acuitv nursing care, dependent upon high technologv machines 
(i.e. ventilators and other supportive breathing apparatus) 
monitors, and feeding techniques shall have a prospective 
payment rate that approximates cost of care. The payment rate 
may be reviewed periodicallv. no more than quarterly, to assure 
proper pavment. A cost settlement at the completion of the fiscal 
period vear end is required. Pavments in excess of cost are to be 
returned to the Di\ision of Medical Assistance. 

(w) A special pavment in addition to the prospective rate shall 
be made in the vear that anv provider changes from the cash 
basis to the accrual basis of accounting for vacation leave costs. 
The amount of this pavment shall be determined in accordance 
v\ith Title XVlll allowable cost principles and shall equal the 
Medicaid share of the vacation accrual that is charged in the year 
of the change including the cost of vacation leave earned for that 
vear and all previous \ears less vacation leave used or expended 
over the same time period and vacation leave accrued prior to the m 
date of certification. The pavment shall be made as a lump sum ~ 
payment that represents the total amount due for the entire fiscal 
vear. An interim pavment mav be made based on an estimate of 



672 



NORTH CAROLINA REGISTER 



October 15, 199H 



13:8 



PROPOSED RULES 



the cost of the vacation accrual. The payment shall be adjusted 
to actual cost after audit. 

(x) The annual prospective rate, effective beginning each .Uily 
1. for facilities that commenced operations under the Medicaid 
Program subsequent to the base year used to establish rates, and 
therefore did not file a cost report for the base year, shall be 
based on the facility's initial rate, established in accordance with 
Paragraph (m) of this Rule, and the applicable price level 
changes, in accordance with Paragraph (I) of this Rule. 

(y) Effective for fiscal \'ears beginning on or after fiscal \ ear 
1998. installation cost of Fire Sprinkler Systems in an ICF-MR 
Facility shall be reimbursed in the following manner. 

(1 ) Upon receipt of the documentation listed in Parts (A) 
through (E) of" this Subparagraph, the Division of 
Medical Assistance shall reimburse directly to the 
provider 90 percent of the verified cost. 
(A) All related invoices. 

Verification from the Division of Facility 






Services that the Sprinkler System is needed . 
Statement from appropriate authorities that the 
Sprinkler System has been installed. 
Three bids to install the system. 
Prior approval from the Division of Medical 
Assistance for any installation projected to cost 
more than tyventv-five thousand dollars 
($25.000). 
(2) The unreimbursed installation cost shall be 
reimbursed after audit through the annual Cost 
Settlement Process. This portion shall be offset by 
profits, after taking into consideration any indirect 



profits and direct 
determined after 



losses. 
audit shall 



Any overpayments 
be returned to the 



13] 
(4} 



program by the provider through the annual cost 

settlement process. 

The installation of the Sprinkler System ]s subject to 

Prudent Buyer Standards contained in the HCFA-15. 

The Sprinkler System's installation costs shall be 

properly recorded on the provider's ICF-MR Cost 

Report. 



Authohn' G.S. W8A-25(bl: I08A-54: W8A-55: 42C.F.R. Part 
44 ^ Subpart C. 



TITLE 11 - DEPARTMENT OF INSURANCE 

Notice is hereby given in accordance with G.S. 150B-21.2 
that the NC Department of Insurance intends to adopt 
rules cited as II NCAC 12 .0840 -.0842. Notice of Rule-making 
Proceedings was published in the Register on .August 3, 1998. 

Proposed Effective Date: April I. 1999 

A Public Hearing will be conducted at 10:00 a.m. on November 
5. 1998 at the Dobbs Building, i"' Floor Hearing Room. 
Raleigh. NC 2761 1. 



Reason for Proposed Action: The Balanced Budget Act of 
1997 became effective on July I. 1998. and requires state 
agencies to adopt NAIC Medicare Supplement Insurance 
Minimum Standards tnodel regulations. 

Comment Procedures: Written comments may be sent to 
Theresa Shackelford. NC Department of Insurance. PO Box 
2638~. Raleigh. NC 2''6II. or call (919) 733-5060. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of state or local government funds. These Rules do not 
have a substantial economic impact of at least five million 
dollars (S3. 000.000) in a 1 2-month period. 

CHAPTER 12 - LIFE AND HEALTH DIVISION 

SECTION .0800 - MEDICARE SUPPLEMENT 
INSURANCE 

.0840 HIGH DEDUCTIBLE PLANS 

(a) In addition to the benefit plans specified in 1 1 NCAC 12 
.0836, the following high deductible benefit plans are authorized 
for use in this State. The provisions of 1 1 NCAC 12 .0836(a) 
through (d) apply to the plans in this Rule. 

(1 ) Standardized Medicare supplement benefit high 
deductible Plan F shall include only the following: 
100°o of covered expenses following the payment of 
the annual high deductible Plan F deductible. The 
covered expenses include the core benefit as defined 
in ii NCAC 12 .0835(2), plus the Medic :'- ' I^ A 
deductible, skilled nursing facilitx care, the viedicare 
Part B deductible, 1 OO^'o ot' the Medicare Part B 
excess charges, and medically necessary emergency 
care in a foreign country as defined in 1 1 NCAC 12 
.0835(3 )(a), (b), (c), (e), and (h) respectively. The 
annual high deductible Plan F deductible shall consist 
of out-of-pocket expenses, other than premiums, for 
services covered by the Medicare supplement Plan F 
policy, and shall be in addition to any other specific 
benefit deductibles. The annual high deductible Plan 
F deductible shall be one thousand five hundred 
dollars ($1500) for 1998 and 1999, and shall be based 
on the calendar year. 

(2) Standardized Medicare supplement benefit high 
deductible Plan J shall consist of only the following: 
1 00°'o of covered expenses following the payment of 
the annual high deductible Plan J deductible. The 



covered expenses include the core benefit as defined 
in 1 1 NCAC 12 .0835(2), p lus the Medicare Part A 
deductible, skilled nursing facility care. Medicare Part 
B deductible, 1 00° o ot' tfie Medicare Part B excess 
charges, extended outpatient prescription drug benefit, 
medically necessary emergency care in a foreign 
country, preventive medical care benefit and at-home 
recovery benefit as defined in H NCAC 12 
.0835(3 )( a), (bLttLteiLglthilLLandli} 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



673 



PROPOSED RILES 



respecti\el\. The annual high deductible Plan J 
deductible shall consist of out-of-pocket expenses- 
other than premiums, for ser\ ices co\ered b\ the 
Medicare supplement Plan J polic\. and shall be in 
addition to an\ other s pecific benefit deductibles. The 
annual deductible shall be one thousand t1\e hundred 
dollars (SI 500) for 1998 and 1999. and shall be based 
on a calendar \ ear, 
(b) After 1999. the annual deductibles for the plans described 
in Subparagraphs (a)( 1 ) and (a)(2) ot' thjs Rule shall be those 
established annualK by the Secretao. ot' the United States 
Department ot' Health and Human Ser\ ices to retlect the change 
in the Consumer Price Index for all urban consumers for the 12- 
month period ending with August of the preceding \ear. and 
rounded to the nearest multiple often dollars (SIO.OO). 

Aiahorin- G.S. 58-2-40: 58-54-10: 58-54-15: 58-54-25. 

.0841 CREDITABLE CO\ ERAGE 

(a) As used m this Rule: 

(1) "Continuous period of creditable co\erage" means the 
period during which an indi\idual was co\ered by 
creditable co\erage. if during the period of the 
co\erage the indi\idual had no breaks m co\erage 
greater than 63 da\s. 

(2) "Creditable co\erage" has the same meaning as in 
G.S. 58-68-30(0(1). 

(b) If an applicant qualities under 1 1 NCAC 12 .0837(a) and 
submits an application during the time period referenced m J_L 
NCAC 12 .0837(a) and, as of the date of application, has had a 
continuous period of creditable co\erage of at least six months, 
the issuer shall not exclude benefits based on a preexisting 
condition. 

IcJ If the applicant qualifies under 1 1 NCAC 12 .0837(a) and 
submits an application during the time period referenced in 1 1 
NCAC 12 .0837(a) and, as of the date of application, has had a 
continuous period of creditable co\erage that is less than six 
months, the issuer shall reduce the period of an\ preexisting 
condition exclusion by the aggregate of' tiie period of creditable 
co\erage applicable to tiie applicant as ot' tiie enrollment date. 
The manner of tiie reduction under this Paragraph shall be a 
prescribed by thie Secretar\ of t]ie Cnited States Department of 
Health and Human Ser\ices. 

tdj 1 1 NCAC 12 .0S37(b) does not appK to this Rule. 

Author in- G.S. 58-2-40: 58-54-10: 58-54-15: 58-54-25. 

.0842 GL ARANTEED ISSUE FOR ELIGIBLE 
PERSONS 

(a) .As used in this Rule: 

( 1 ) "BankruptcN" means when a Medicare^Choice 
organization that is not an issuer has tiled, or has had 
tiled against it. a petition for declaration of 
bankruptCN and has ceased doing business in the state. 

(2) "Employee welfare benefit plan" means a plan, fund 
or program of emplo\ee benefits as defined in 29 
Li.S.C. ^1002 (Emplo\ee Retirement Income Securit\ 



Act). 

(3) "Insohencv" means when an issuer, licensed to 
transact the business of insurance in this State, has 
had a final order of liquidation entered against it w ith 
a finding of insol\enc\ b\ a court of competent 
jurisdiction in the issuer's state of domicile. 

(4) ".Medicare^Choice plan" means a plan of co\erage for 
health benefits under Medicare Part C as defined in 
Section 1859. Title IV. Subtitle A. Chapter 1 of PL. 
105-33. and includes: 

(A) Coordinated care plans which pro\ide health 
care ser\ ices, including but not limited to 
health maintenance organization plans (with or 
without a point-of-ser\ ice option), plans 
offered by pro\ider-sponsored organizations, 
and preferred pro\ ider organization plans: 

(B) Medicare medical sa\ings account plans 
coupled with a contribution into a 
Medicare-Choice medical sa\ings account: 
and 

(C) Medicare-Choice private fee-for-ser\ ice plans. 

(b) Eligible persons are those indi\iduals described in 
Paragraph (c) of this Rule who appK to enroll under the polic\ 
not later than 63 da\s after the date of the termination of 
enrollment described in Pp'- agraph (c) of tiiis Rule, and who 
submit e\ idence of the date i, " termination or disenrollment with 
the application for a Medicare supplement polic\. 

W ith respect to eligible persons, an issuer shall not den\- or 
condition the issuance or effecti\eness of a Medicare 
supplement polic\ described in Paragraph (d> of tius Rule that is 
offered and is a\ailable for issuance to new enrollees by the 
issuer, shall not discriminate in the pricin g of such a Medicare 
supplement polic\ because of health status, claims experience, 
receipt of health care, or medical condition, and shall not impose 
an exclusion of benefits based on a preexisting condition under 
such a Medicare supplement polic\. 

(c) .An eligible person is an individual described in an\ of the 
following Subparagraphs: 

( 1 ) The indis idual is enrolled under an emplo\ ee welfare 
benefit plan that pro\ides health benefits that 
supplement the benefits under Medicare: and the plan 



t2J 



I 



terminates, or tiie plan ceases to pro\ide all such 
supplemental health benefits to the indix idual: 
The indi\ idual is enrolled with a .Medicare-Choice 
organization under a Medicare-Choice plan under 
part C of Medicare, and there are circumstances 
permitting discontinuance of die indi\ idual's election 
of the plan under the first sentence of Section 
1851(e)(4) of the federal Social Security Act, which 
consists of the following: 

"Effecti\e as of Januarx J^ 2002. an indi\idual max 
discontinue an election ot' a Medicare-Choice plan 
oftered b\ a Medicare-Choice organization other than 
during an annual, coordinated election period (under 
Medicare) and make a nexx election under this section 

ifi 

(.A) The organization's or plan's certification (under 



i 



674 



SORTH CAROLIXA REGISTER 



October 15. 1998 



13:8 



PROPOSED RULES 



this part) has been 
orranization has 



terminated or the 

terminated or otherwise 



discontinued providing the plan in the area m 
which the individual resides: 



(B) The individual is no longer ehgibie to elect the 
plan because of a change in the individual's 

" place of residence or other change jn 
circumstances specified by the Secretary of the 
United States Department of Health and 
Human Services, but not including termination 
of" the individual's enrollment on the basis 
described in Section 1851(g)(3)(B) of the 
federal Social Security Act ( where the 
individual has not paid premiums on a timely 
basis or has engaged in disruptive behavior as 
s pecified in standards under Section 1856). or 
the plan is terminated for all individuals \\ ithin 
a residence area; 

(C) The individual demonstrates, in accordance 
with guidelines established b\ the Secretary of 
the United States Department of Health and 
Human Services, that: 

(i) The organization offering the plan 
substantially violated a material 
provision of the organization's contract 
under this Part in relation to the 
individual, including the failure to 
provide an enrol lee on a timeh basis 
medically necessan, care for which 
benefits are available under the plan or 
the failure to provide such covered care 
in accordance with applicable quality 
standards: or 
(ii) The organization, or agent or other 
entity acting on the organization's 
behalf, materially misrepresented the 
plan's provisions in marketing the plan 
to the individual: or 

(D) The individual meets such other exceptional 
conditions as the Secretary of the United States 
Department ot" Health and Human Services 
may provide." 

(3) The individual is enrolled with: 

(A) An eligible organization under a contract under 
Section 1876 (Medicare risk or cost): or 

(B) A similar organization operating under 
demonstration project authority, effective for 
periods before April I. 1Q9Q: or 

(C) An organization under an agreement under 
Section I833(a)( I )(A) (health care prepayment 
plan): or 

(D) An organization under a Medicare Select 
policy: and 

(E) The enrollment ceases under the same 
circumstances that would permit 
discontinuance of an individual's election of 
coverage under the first sentence of Section 



185l(e)(4)ofthe federal Social Security Act as 
delineated in Subparagraph (2) of this 
Paragraph. 

(4) The individual is enrolled under a Medicare 
supplement policy and the enrollment ceases because: 

(A) Of the insolvency of the issuer or bankruptcy 
of the nonissuer organization or of other 
involuntary termination of coverage or 
enrollment under the policy: 

(B) The issuer of the policy substantially violated 
a material provision of the policy; or 

(C) The issuer, or an agent or other entity acting on 
the issuer's behalf, materially misrepresented 
the policy's provisions in marketing the policy 
to the individual: 

(5) The individual was enrolled under a Medicare 
supplement policy and terminates enrollment and 
subsequently enrolls, for the first time, with any 
Medicare+Choice organization under a 
Medicare+Choice plan under part C of Medicare, any 
eligible organization under a contract under Section 
1 876 (Medicare risk or cost), any similar organization 
operating under demonstration project authority, an 
organization under an agreement under Section 
1833(a)( I )(A) (health care prepayment plan), or a 
Medicare Select policy; and the subsequent 
enrollment js terminated by the enrollee during any 
period ys ithin the first 12 months after the subsequent 
enrollment (during which the enrollee is permitted to 
terminate the subsequent enrollment under Section 
1851(e) of the federal Social Security Act): or 

(6) The individual, upon first becoming eligible for 
benefits under part A of Medicare at age 6x, enrolls in 
a Medicare+Choice plan under part C of Medicare, 
and disenrolls from the plan by not later than 12 
months after the effective date of enrollment. 

(d) The Medicare supplement policy to which eligible persons 
are entitled under: 

LU Subparagraphs (cKl), (2), (3) and (4) of this Rule is 
a Medicare supplement policy yvhich has a benefit 
package classified as Plan A^ B^ C, or F offered by 
any issuer. 

(2) Subparagraph (c)(5) is the same Medicare supplement 
policy in \yhich the individual y\'as most recently 
previously enrolled, if available from the same issuer, 
or, if not so available, a policy described in 
Subparagraph ( I ) of this Paragraph. 

(3) Subparagraph (c)(6) shall include any Medicare 
supplement policy offered by any issuer. 

(e) At the time of an event described in Paragraph (c) of this 
Rule because of yvhich an individual loses coverage or benefits 
due to the termination of a contract or agreement, policy, or plan, 
the organization that tenninates the contract or agreement, the 
issuer terminating the policy, or the administrator of the plan 
being terminated, respectively, shall notifi' the individual of his 
or her rights under this Section, and of the obligations of issuers 
of Medicare supplement policies under Paragraph (b) of this 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



675 



PROPOSED RULES 



Rule. Such notice shall be communicated contemporaneousl\ 
with the notitlcation ot' tennination. At the time ot' an event 
described jn Paragraph (c) of thjs Rule because of which an 
individual ceases enrollment under a contract or aareement. 
policN, or plan, the ortzanization that offers the contract or 
agreement, regardless of the basis for the cessation of 
enrollment, the issuer offering the policy, or the administrator of 
the plan. respectiveK. shall notify the indixidual ot" hjs or her 
rights under this Section, and of the obligations of issuers ot" 
Medicare supplement policies under Paragraph (b) of this Rule. 
Such notice shall be communicated within 10 working days of 
the issuer receiving notification of disenrollment. 

AiilhorllvG.S. xS-:-l<): 5S-54-in: 5S-54-I5: 5,S-5-t-25. 



TITLE 13 - DEPARTMENT OF LABOR 

Notice is hcrehy iriren in accordance wilh (J.S. 1 51)8-21.2 
thai the Department of Labor intends to amend rules cited 
as 13 SCAC 12 .0303 - .030^. .0602. .0604. .0-01 - .0-02: 
adopt rules cited as 13 XCAC 12 .0308 - .0310. .0803 - .080^: 
and repeal rules cited as 13 NCAC 12 .0101. .0104. .0502. 
. 0603. . 0605. Notice of Rule-making Proceedings was published 
in the Register on August 3. 1998. 

Proposed Effective Date: April I. 1999 

A Public Hear'mo will be conducted at 10:00 a.m. on November 
3. 199S at the Administrative Office of the Courts Classroom. 
322 Chapanoke Road Raleigh. NC 2-603. 

Reason for Proposed Action: To update the Wage and Hour 
rules to accord with statutory amendments and to reflect current 
policy and interpretations. 

Comment Procedures: Written comments will he accepted 
through 5:00 p.m. on November 16. 1998. Written comments 
must be delivered or mailed to Ann B. Wall. NC Department of 
Labor 4 West Edenton Street. Raleigh. NC 2-601. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of stale or local government funds. These Rules do not 
have a substantial economic impact of at least five million 
dollars (S 5. 000. 000) in a 12 -month period. 

CHAPTER 12 - WAGE AND HOUR 

SECTION .0100 - GENERAL PROVISIONS 

.0101 W.AGE AND HOUR DIVISION 

Th e ma i n oftlc e of th e Wag e and Hour Dixision. which 
administ e r s th e provision s of Articl e -A of G.S. Chapt e r Q5. i s 
maintain e d i n th e Ral e igh oftlc e of th e D e partm e nt of Labor at 
I West Ed e nton Str ee t. Ral e igh. North Carol i na 27601. Th e 
Divis i on maintains branch offic e s at 20 South Spruc e Str ee t. 



Ash e v i ll e . North Carolina; 1 15 Broadfoot Av e nu e . Fay e tt e vili e . 
North Carolina; and 500 W es t Trad e Str ee t. Charlotte. North 
Caro l ina. Th e mai l ing addr e ss is: 

Wag e and Hour Division 

North Carolina D e partm e nt of Labor 

■I W es t Ed e nton Str ee t 

Ral e igh. North Carolina 27601 

91Q/7'"33 2152. 

Authority G.S. 95-25. H. 

.0104 FORMS 

(a) An Inv e stigat i on Report will b e u se d to cite employ e rs for 
violations of th e Wag e and H o u r Act. A r e port will includ e s uch 
infonnat i on a s em ploy e r id e ntification, dat e of writing, a listing 
of violation s by r e f e r e nc e to th e g e n e ral statut e s, a d e scription of 
e ach \iolation. th e iny e stigating compl i anc e officer's s ignatur e 
and. if poss i bl e , the s ignatu re o f th e e mploy e r. 

(b) Wage Transcript i on and Computation Sh ee ts will b e us e d 
to comput e back wag e s du e und e r the Wag e and Hour Act. A 
s e parat e sh ee t may b e us e d for e ach e m pl o yee . Each sh ee t yvi l l 
includ e — stjeii — information — as — e mp l oy er — aed — e mploy ee 
id e ntification, dat e of yvriting. dat e s and hours of e mploym e nt 
for which back wag e s ar e b e ing computed, rates of pay for th e 
p e riod of e mploym e nt, yvag es a ctu all y pa i d, th e amount du e th e 
em p l oy ee . — aftd- the — inv e stigating — complianc e — offic e r's 
id e ntificat i on. 

(c) A Summary of Lmpaid Wag e s yvill be u s e d to summariz e 
for e mp l oy e r s th e unpaid back wag e s and th e amounts oy\ e d a l l 
e mploy ee s. A summary \\\\\ — includ e such information as 
e mploy e r id e ntification, dat e o f yvriting. id e ntification of th e 
inv e st i gating complianc e offic e r and th e total amount of unpaid 
yvag e s du e by th e e mploy e r. A summary ysill list e ach e mploy ee 
by name, th e tim e period fo r which wag e claims for e ach 
e mploy ee ar e b e ing comput e d and th e gross amount du e e ach 
e mploy ee . If th e e mploy e r agr ee s to pay th e back wag e s or som e 
port i on of th e m, the e xp e cted dat e of paym e nt yvill b e includ e d 
on th e summary. 

(d) A Back Wag e R e c e ipt may b e us e d to v e rify paym e nts of 
y \ ag e s to e mploy ee s by e mploy e rs. .\ r e c e ipt w ill includ e such 
information as employer and e mploy ee id e ntification, th e 
e mploym e nt p e riod for which th e back wag es ar e b e ing paid, th e 
amount of yvag es r e ceiv e d by th e e mploy ee (d e tailing any 
d e ductions or y\ithholdings). and a r e l e as e o r waiver by th e 
e mp l oy ee of th e right to bring a civi l action pursuant to th e Wag e 
and Hour Act to r e cov e r back y\ag e s. A r e c e ipt will also includ e 
th e signatur e s of th e e mploy ee and th e e mploy e r and th e dat e of 
signing. 

fe4 — A Youth Employm e nt C e rtificat e y\ill be used for 
app l ication and issuanc e of e mploym e nt c e rtificat e s for work e rs 
under — 18 y e ars of ag e . — A — c e rtificat e yvill — includ e such 
informat i on a s youth identification, inc l udi n g ag e . and e mploy e r 
id e ntific a t i o n , in cluding a job d e scr ip t i o n of the yvork to b e 
p e rfonn e d by th e youth and th e hour s to b e work e d. A c e rtificat e 
will also includ e th e signatur e s of a par e nt or g u ardian, th e 
e mploy e r, and th e youth. An appro\ e d c e nificat e will include th e 
si gnatur e of th e Dir e ctor of Social S e rvic e s. 



i 



< 



676 



NORTH CAROLINA REGISTER 



October 15, 1998 



13:8 



PROPOSED RULES 



(0 An Application for a Handicapp e d Work e r's P e rmit w i ll 
be used for r e qu e sting subminimum wag e rat e s fc handicapp e d 



(b) An employer must maintain accurat e and compl e te records 
of e ach e mploy ee 's tips, wh e th e r rec e iv e d individually or as part 



work e rs. An application wil l includ e e mp l oy e r and e mpkn ee of a tip pooling arrang e m e nt. — individual contributions and 

id e ntification. An application will a l so includ e such informat i on r e sulting shar e s of any tip pooling mu s t b e r e cord e d. — Ifi 

as a job classification and a description of th e duti e s r e quir e d in addition, an e mploy e r's r e cord s must show th e amount claim e d 

the classification, the wag e rat e (as a p e rc e ntag e of th e minimum as a tip credit for each employ e e for e ach workw ee k. — If th e 

wag e ) \shich the e mplo\ e r propo se s to pa> th e wo r k e r, th e w age amount c l aim e d as a cr e dit cannot be calculated from th e r e cords 

rat es of nonhandicapp e d work e rs in th e s am e Job c l assification, 

and th e total numb e r of handicapped and oth e r work e rs 

employ e d. An application will also contain a d e scription of th e 

natur e of th e worker's disabilit> and th e d e gr ee of handicap in 

r e lation to the duties r e quir e d b\ th e job classification. An 

application v\ill inc l ud e the signatur e s of th e e mployer and th e e mploy ee 's tip s , obta i ning th e signatur e or initials of th e 



for any workw ee k, th e employ e r ma\ not count th e tip s a s 
wag es . A tig shall not include a service charge which the 
employer requires the customer to pa\. no matter what the 
charge js labeled. 

(c) If an e mp l oy e r maintains th e requir e d records of e ach 



handicapped work e r and th e date of signing. 



e mploy ee s — monthly — er — for — eaeh — pa^i — p e riod — const i tut e s 



(g) Wh e n a m e dical e .xamination is r e quir e d pursuant to Rul e c e rtification h\ th e employe e s and th e s e tips will b e count e d as 

.0202 of this Chapt e r, th e e xamining ph\sician ma> compl e t e a wages pursuant to G.S. 05 25.3(f). Tips belong to the emplo\ee 

Doctor's Certificat e of Work e r's Hand i cap to indicate any for whom the\ were left by the customer. Emplo\ees and 

phssical or m e ntal disab ili ti e s th e handicapp e d work e r has. Thi s employers mav not agree that the employee will surrender tips to 



c e rtificat e will includ e such infonnation as e mplo\ee and 
emploN e r id e ntification. Job class i fication and d e scription, and 
c e rtification b\ th e physician that th e ph\ sical or m e ntal d e f e ct 
constitut e s a disability for th e particular Job which th e work e r 
will b e p e rforming. Th e c e rtificat e will al s o inc l ud e th e dat e d 
signatur e of th e examing phxsician. 

{h) — A Handicapp e d Work e r C e rtificat e will b e us e d to 
authoriz e subminimum wag e rat e s for disabl e d or handle, .pp e d 
work e rs. A c e rtificat e will includ e e mploy e r and e mploy ee 
id e ntification and th e Job classification. A c e rtificat e will also 
includ e th e submimimum wag e rat e which may b e paid to th e 
handicapp e d work e r and th e e ff e ctiv e dat e of th e c e rliflcat e . A 
c e rtificat e will b e dat e d and sign e d by th e Dir e ct^ i r of th e Wag e 
and Hour Divi s ion. 

(i) An Emplo\m e nt Information Form will be used to r e duc e 
v\ag e and hour compla i nts r e ceiv e d by the Wag e and Hour 
Division to writt e n form. A complaint form will includ e s uch 
information as e mplo\er and employee identification, filing dat e 
of complaint, p e riod of employm e nt. Job classification and 
d e scription, m e thod of paym e nt of wag e s, and work sch e du le . 
Th e al le ged wag e and hour violation wi l l b e id e ntifi e d on th e 
complaint. Any complaints r e duc e d to writing b\ th e Wag e and 
Hour Division wil l also includ e th e id e ntification of the intak e 
p e rson. 

tj^ — F e deral wag e and hour forms us e d to c e rtify sh e lt e r e d 
workshops for th e handicapp e d pursuant to th e F.L.S.A. ma\ b e 
us e d b> th e Wag e and Hour Division for c e rtification und e r th e 
Wag e and Hour Act. 



Authority G.S. 95-25.3: 95-25.5: 95-25.1": 95-25.19: 95-25.22. 
SECTION .0300 - WAGES 

.0303 TIPS AND TIP CREDITS 

(a) For th e purpose of counting tip s a s wag e s pursuant to G.S. 



95 25.3(f). acc e ptanc e of wag e s from th e e mploy e r do e s not 
constitute c e rtification b\ the employ ee of tips r e c e iv e d. Tips 
are not wages. Tips ma\ be counted toward wages onl\ to the 
extent set for th in Paragraphs (e). (f) and (g) of this Rule. 



the employer However, if there js a fig pooling arrangement 
under Q5-25.3(f). the employee ma\ be required to surrender tips 
received for distribution in accord with the tip pooling 
arrangement. 

[dj if a customer pays by credit, charge or debit card and 
includes a tip for an employee: 

( 1 ) the tips so charged accrue to the employee at the time 
of the charge. The employer shall pay the employee 
the charged tip no later than the payday for the pay 
period in yyhich the customer signs the charge: and 

(2) employers may retain from the tips an amount up to or 
equal to the pro rata portion of the fee charged by the 
card issuing company which is attributable to the tips. 
When employers make such retentions, they do so 
y\ ithout violating G.S. 95-25.6 and yvithout becoming 
disqualified from claiming the tip credit on the 
charged tip. 

(e) In order for an employer to claim a tip credit toward the 
minimum wage: 

( 1 ) the employee must be a tipped employee ysithin the 
meanin g of the Act: 

(2) the employer shall notify the employee in advance of 
the pay period in which the employer intends to claim 
the tip credit: and 

(3) the employee must retain all tips, subject to any valid 
tip pooling arrangement as described in Paragraph (h) 
of this Rule. 

(f) The following records shall be kept by the employer for 
each employee for yvhom a tip credit is claimed: 

( 1) Complete and accurate records of the amount of tips 
received for each workyveek. The sole exception to 
this requirement js set forth in Paragraph (g) of this 
Rule; 

(2) Certification by the employee of amount of tips 
received. The employee certification js the 
employee's signature or initials on the employer's 
records. Certification shall occur either monthly or 
for each pay period. The sole exception to this 
requirement is set forth in Paragraph (g) of this Rule. 



B:H 



NORTH CAROLINA REGISTER 



October 15, 1998 



677 



PROPOSED RULES 



An employee's acceptance of uaaes from the 
employer shall not constitute certification by the 
employee of tips received: 

(3) The amount claimed b\ the employer as tip credit for 
each employee for each workweek: 

(4) For each employee participating in a tip pool, for each 
workweek, the amount of contributions to the tig pool: 
and 

(5) For each employee participating in a tip pool, for each 
y\orky\eek. the amount receiyed from the tjp pool. 

(gj If the employee refuses to certify or to certil\ accurately 
and completely the amount of tips receiyed. a tip credit may be 
claimed if the employer: 

( 1 ) meets the requirements of Paragraphs (e)(3) and (f) of 
this Rule: and 

(2) can demonstrate yvith written documentation for each 
workweek for y\hich a credit is claimed: 

(A) that the tipped employee certifies having 
receiy ed tips in the amount for y\hich the credit 
is taken, or 

(B) that a similarly situated tipped employee 
recejy ed tips in the amount for which the credit 
is taken, or 

(C) by other method yvhich reliably establishes that 
the tipped employee regularly receives tips jn 
the amount for yvhich the credit js taken. 

(h) "Tip pooling" as used in G.S. 95-25. 3(f) is an arrangement 
jn which aU or a part of the tips of the contributing employees 
are combined into a common pool and then diy ided among the 
participating employees according to a pre-determined formula. 
An employee's share of a tig pool js that portion of the total 
amount in the pool yvhich the employee receives. A tip pooling 
arrangement is valid under G.S. 95-25. 3(f) when: 

( 1 ) the contributin g employees are notified of the 
arrangement before the pay period in which h will be 
used: 

(2) the share of each contributing employee is at least 
85° of thie employee's tips before the employee 
contributes to the tip pool: and 

(3) only employees who customarily and regularly receive 
tips receive a share from the pool. 

The requirement of 95-25.6 that the employer pay "tips accruing 
to tfie employee" shall be satisfied if thie employee in a tip 
pooling arrangement receives 85°o of tfie employee's actual tips 
before pooling or the employee's share received from the pool. 
whichever is greater. 

By complying with Subparagraph (h)(2) of this Rule, the 
employer has also satisfied the provision of G.S. 95-25. 3(f) 
requiring the employer to allow the tipped employee to retain all 
tips. 



AiithorinG.S. 95-25. 3: 95-25.6: 95-25.13: 95-25.15: 95-25.19. 

.0304 W ITHHOLDING OF WAGES 

(a) An e mp l oy e r may withhold, d e duct or div e rt any portion 
of an e mploy ee 's wages if t he e mploy e r has obtain e d a writt e n 
authorization from th e employee in accordanc e with G.S. 



95 25.8. and th e d e ductions comply with th e following monetary 
l i mitations: 

f+^ Th e combin e d amount of any authoriz e d payroll 

d e ductions for cash s hortag e s, inv e ntor)' shortages, 
loss or damag e to an e mploy e r's prop e rty' and d e posits 
mad e by th e e mploy ee for th e us e of th e e mployer's 
prop e rty may not r e duc e an e mploy e e's pay chock for 
any pa > period b e low th e amount sp e cified in G.S. 
95 25.10. 

f3^ Any r e coupm e nt or payment rec e ived by an e mploy e r 

from an e mploy ee for shortag e s, losses, damag e s and 
d e posits b_v m e thods oth e r than payroll d e ductions 
( s uch — as — eash — paym e nts — or e ndorsing — over of 
paych e ck s ) is al so limite d so tha t th e combin e d 
amount of any such r e co u pm e nt may not r e duc e an 
e mploy ee 's wag e s for any pay p e riod b e low th e 
amount s pecifi e d in G.S. 95 25.10. 
fb^ Pay roll deductions — for cash — shortages. — inv e ntory- 
shortag e s, or lo s s or damage to an e mploy e r's property arc 
furth e r limit e d in that e v e n wh e n prop e rly authoriz e d, th e y may 
not b e d e duct e d from an e mploy ee 's wages un le ss th e employe e 
r e c e iv e s notic e of the amount to b e d e ducted s e v e n day s prior to 



« 



the- 



day on which th e d e duction is to b e mad e . This s e v e n 



pay 

day advanc e notic e do e s not apply to such d e ductions in a fmal 
payc' ^e ck. although i f a blank e t authorization is in e ff e ct some 
advar . '' notice and a r e asonabl e opportunity to withdraw must 
b e giv e n in accordanc e with G.S. 05 25.8. 

(e) i_aj The employer m«st shall furnish the employee an 
itemized statement indicating the amount and purpose of all 
deductions, diversions, payments or withholding of wages for 
each pay period in which deductions or recoupments are made. 

f4) £b) A repayment in excess of the statutory limitation 
prescribed in Paragraph (a) of this Rul e and G.S. 95-25.10, is 
permitted if the repayment is voluntary. A repayment is 
voluntary if it is made without fraud, misrepresentation, er 
undue influ e nc e , influence, duress, or coercion. 

fe) |_cj In the case of employees for whom there is no hourly 
record-keeping requirement, an average number of hours worked 
per pay period may be agreed upon in writing in adv ance by the 
employer and each employee and may be used for calculating the 
amount of protected w ages each pay period. Such agreements 
are subject to modification as necessary to reflect permanent and 
substantial changes in the average number of hours worked per 
pay period. 

.AiilhovinG.S. 95-25.8: 95-25.9: 95-25.10: 95-25.11: 95-25.13: 
95-25. 1 9. 

.0305 ALTHORIZ.ATION FOR WITHHOLDING OF 
WAGES 

(a) An authorization by an e mploy ee which will allow th e 
e mploy e r to w ithhold or div e rt a portion of th e employ ee's w ag e s 
must b e in writing and must sp e cily th e r e ason for th e d e duction. 
employer may withhold or divert a portion of an employee's 
wage s without the employee's authorization only when the 
employer is required or empowered to do so by North Carolina 
or federal law. A valid authorization by an employee is required 



678 



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October 15. 1998 



13:8 



PROPOSED RULES 



in all other circumstances for an employer to make a deduction 
from an employee's wages. Two types of authorization are 
permitted: 

( 1) A specific authorization shall be used when the 
amount or rate of' the proposed deduction js known 
and agreed to at the time the emplo\ee signs the 
authorization. 

(2) A blanket authorization shall be used when the 
amount of the proposed deduction js not known and 
agreed to at the time the empioNce signs the 
authorization. 

(b) An authorization for withholding of wag e s must be sign e d 
on or b e for e th e payday for th e pay p e riod from which the 
d e duction is to be made. — The two permi s sibl e typ e s of 
authorization ar e th e sp e c i fic authorization and th e blanket 
authorization, by an employee, to be yalid, shall: 



ill 
(2} 

(3J 

£5J 



be written; 



be signed by the employee on or before the payda\ for 
the pa\ period for which the deduction is being made; 
shovN the date of signing by the em plo\ee; 
state the reason for the deduction; and 
if it is a specific authorization, state the specific dollar 
amount or percentage of wages to be deducted from 
each pa\ check and tfie number of pa\ checks or length 
of time for which the deduction is authorized. 

(c) A specific authorization may be for one or more 
paychecks and mtjst shall state the dollar amount or percentage 
of wages which the employee agrees may be deducted from each 
paycheck. Emp l oy ee s EmpI vers shall giye employees must b e 
giv e n a reasonable opportunity to withdraw specific 
authorizations if such deductions are for their convenience. 
Deductions for the convenience of the employees include, but 
are not limited to. such things as insuranc e , savings plans, credit 
union installments, savings bonds, union or club dues, unifonn 
rental, uniform cleaning, parking and charitable contributions. 
All other authorizations for w i thholding of s p e c i tlc amounts, 
onc e agr ee d upon by an e mploy ee , may not b e withdrawn. 

(d) A blank e t authorization may b e s ign e d b> an e mploy ee 
which — authoriz e s — sp e citlc — categori e s — ef — d e duction s — er 
withholdings without sp e cifying an actual dollar amount. Wh e n 
th e amount of any such d e duction b e comes known, th e e mp l oy e r 
may not mak e th e d e duction until th e e mploy ee has b ee n giv e n 
advanc e notic e of th e sp e cific amount of th e propos e d d e duct i on 
and has b ee n giv e n a r e asonable opportunity to withdraw h is 
authorization b e for e th e deduction is mad e . What constitut e s 
advance notice — for d e ductions — involving cash — shortag es , 
inventory s hortag e s, or loss or damage to an e mploy e r's property 
is at l e a s t th e s e v e n day p e riod proscrib e d by G.S. 25.9 and Rule 
.030 1 of thi s S e ction. An employer shall not make a deduction 
under a blanket authorization until the emplo\ee has been given: 

( 1 ) Advance notice of the specific amount of the 
proposed deduction. For purposes of deductions 
involving cash shortages, inventory shortages, or loss 
or damage to an employer's property, advance notice 
shall be at least the seven day period prescribed in 
G.S. 95-25.9. 

(2) A "reasonable opportunity to withdraw" the 



authorization before the deduction is made. A 
reasonable opportunity to withdraw a blanket 
authorization shall be at least three calendar days from 
the date of die employer's notice of tlie specific 
amount of the deduction to be taken. 

(e) Sp e cific and blank e t authorizations signed by an e mploy ee 
may not waiv e and mu s t comply with th e au t h orizat i on 
r e quir e m e nts. When an authorization is required by the Act, the 
monetary limitations and time requirements specified in G.S. 
95-25.8. 95-25.9 and 95-25.10 of the Wage and Hour Act. and 
th e ru le s and r e gulations promulgat e d th e r e und e r. Act apply and 
shall not be waived. 

(f) Advances of wages to the employee at the employee's 
request are considered to be prepayment of wages. Advances of 
wages to a third party at thie employee's request are also 
considered to be prepayment of wages. A dated receipt, signed 
bv the emplo\ee. for the advanced wages, shall be sufficient to 
show that the advance was requested and made. No w ithholding 
authorizations are required by G.S. 95-25.8(2) when the 
employer deducts for the advanced wages. 

(g) In the absence of an executed loan document, the principal 
of a loan from an employer to an employee is considered to be 
an advance of wages. Such loans may include credit advanced 
by tlie employer to an employee at the employee's request for 
purchasing from the employer items not primarily for the benefit 
of tlie employer. Deductions for interest and other related 
charges require written authorizations in accordance with these 
Rules. Personal loans from a superyisor to a subordinate or 
loans made by third parties to an employee with payroll 
deduction arrangements are not an advance of wages. 

(h) An Dverpayment of wages to an employee as a result of a 
miscalcu'ation of wages or other bona fide error may be treated 
as an advance of wages by tfie employer. An underpayment of 
wages to an emplo\ee as a result of a miscalculation of wages or 
other bona fide error shall be a violation ot" G.S. 95-25.6. The 
employer shall pay any such underpayment owed as soon as 
possible upon the discovery of the error along with accrued 
interest at the legal rate set forth in G.S. 24-1 from the date the 
wages first became due. 

(iJ Authorizations for deductions that are not pennitted by law 
are invalid. For example: 

( 1 ) G.S. 97-21 invalidates agreements by an emplo\ee to 
gay any portion of a premium paid by his or her 
employer to a workers' compensation insurance 
carrier; 

(2) 13 NCAC 7F .010l(aK2) requires the employer to 
provide, at no cost to tfie emplo^ee. ali personal 
protective equipment which the employee does not 
wear off the jobsite for use off the job. 

If an employer withholds or diveils wages for purposes not 
pennitted by law, the emplo\er shall be in violation of G.S. 95- 
25.6 or G.S. 95-25.7. or both, even if tlie employee authorizes 
the withholding in writing pursuant to G.S. 95-25.8(2). because 
that authorization is invalid. 

(jj An employer may obtain a written authorization pursuant 
to G.S. 95-25.8(2 )(a) and include in the authorization a provision 
for deducting the balance of the unpaid amount from the 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



679 



PROPOSED RULES 



employee's paycheck in the event the employee separates before 
the full amount has been collected. If the emplo\er obtains such 
an authorization, the emplo\er may deduct as much of the 
balance possible from the final pa\check without having to give 
the emplo\ee notice of the amount and a reasonable opportunit\ 
to w ithdrau his or her authorization as required by G.S. 95- 
25.8(2)(b). subject to the withholding limitations of G.S. 95- 
25.10. ff the emploxer does not include in the specific 
authorization an express pro\ ision to deduct the balance upon an 
emplo\ee's separation, then an emplo\er shall not deduct from 
the t1nal pa\check an unpaid balance which is greater than the 
specific amount or percentage authorized unless an additional 
authorization is obtained. 

(k) A wage credit in the form of tips in accordance w ith Rule 
.0303 of this Section, or the reasonable costs of meals, lodging 
or other facilities m accordance Rule .0301 of this Section, is not 
a withholding of wages and does not require written 
authorization pursuant to G.S. 95-25.8(2). 

[JJ An emploNer js permitted to establish an escrow or bond 
account funded tn an emploxee's wages to recoxer amounts 
owed to the emplo\er. as long as the emplo\er obtains a \alid 
authorization from the emploxee pursuant to G.S. 95-25.8(2) 
before di\erting wages to such an account. An emplo\ er must 
also obtain a valid authorization from the emplo\ee before 
making a deduction from the account. Upon discontinuance r f 
emplo\ment for an\ reason, remaining funds shall be returned t. 
the emplo\ee. 

AmhonnG.S. 95-25. S: 95-25.9: 95-25.10: 95-25.11: 95-25.13: 
95-25.19. 

.0306 VACATION PAY 

(a) The purposes of the \acation pro\isions of the Wage and 
Hour Act are to ensure that emplo\ ees know what their \ acation 
benefits are and that the\ receive the promised benefits. 
Employ e es must Employers shall b e notifi e d notifs employees 
of company the emplo\er's policies and practices concerning 
vacation pa\ in two \va\s. as follows: 

( 1) Pursuant to G.S. 95 25.I3( 1 ). an e mploy ee must b e 
notified oralK OralK or in writing at the time of 
hiring. Pursuant to G.S. 95 25.13(2). an emplo\o e s 
must also b e notified 

(2) B\ makin g a cop\ of the policies and practices 
available to them in writing or through a posted notice 
maintained in a place accessible to the e mplo\ ee . 
employees. 

(3) Before the effective date of an\ changes, in writing or 
through a posted notice maintained jn a place 
accessible to the employees. 

(b) All vacation policies and practices communicat e d to 
e mployees — Ffttjst shall address: th e m e thod — of vacation 
calculation 

( 1 ) how and when vacation is earned so that the e mploy ee 
know s employees know the numb e r of da\ s amount of 
\ acation to which he-is the\ are entitled; 

(2) whether or not vacation days time ma\ be carried 
forward from one \ear to anothe r: another. and if so. 



{ 



in what amount; 

(3) when vacation days time must be taken; 

(4) when and if vacation pa\' ma\ be paid in lieu of time 
off; and 

(5) under what conditions and in what amount vacation 
pa\ will be paid upon t e rm i nation, discontinuation of 
employment. 

(c) Ambiguous policies and practices w+H shall be construed 
against the employer and in favor of the employees. 

fM — If a company provides vacations, all vacation tim e or 
paym e nt in li e u of tim e off must b e pa i d to th e e mployees in 
accordanc e with e stablish e d company policy or past practice as 
known and und e r s tood bv' th e e mploy ee s. 

^ [d] Any employer who fails to notify an employee in 
accordance with G.S. 95-25.13 and Paragraph (a) of this Rule, 
of any policy or practice which requires or results in a loss or 
forfeiture of vacation time or pav. is liable for such vacation time 
and pav without loss or forfeiture bv the employee. 

.-tnthoriivG.S. 95-25.2: 95-25.12: 95-25.13: 95-25.19. 



.0307 BONUSES AND COMMISSIONS 

(a) Paym e nt of Employ ers may pav vsages based on bonuses, 
commissions or other forms of calculation mav b e paid as 
infrequently as annually, so long a s if the employees are so 
notified in advanc e of th e e mploy e r's tim e for paym e nt of such 
wag e s, before earning such wages. Employees must also b e 
notifi e d Employers shall notify employees in accordance with m 
the provisions of G.S. 95-25.13 of any company policy or " 
practice which requires or results in forfeiture of such wages. 

(b) Employees must be notifi e d of th e tim e for paym e nt and 
of forf e itur e polici e s r e lating to wag e s bas e d on bonus e s, 
commissions or oth e r forms of ca l culation in tvvo ways. 
Pursuant to G.S. 95 25.13(1). an e mp l oy ee must b e notifi e d 
orally or in writing at th e tim e of hiring. — Pursuant to G.S. 
95 25.13(2). an e mploy ee must also be notifi e d in writing or 
through a post e d notic e maintain e d in a plac e acc es s i bl e to the 
e mploy ee . Employers shall notify einplovees of the employer's 
policies and practices concerning pav. wages based on bonuses, 
commissions, or other forms of calculation as follows and in 
accordance with Rule .0801 of this Chapter: 

( 1 ) Orally or in writing at the time of hiring; 

(2) By making a copy of the policies and practices 
available to them in v\riting or through a posted notice 
maintained in a place accessible to the employees; and 

(3) Before the effective date of anv changes, in writing or 
through a posted notice maintained m a place 
accessible to the employees. 

(c) Any employer who fails to notify an employee in 
accordance with G.S. 95-25.13. and Paragraphs (a) and (b) of 
this Rule, is liable for such wages based on bonuses, commission 
or other forms of calculation without forfeiture bv the employee. 

.Authority G.S. 95-25.6: 95-25. ~: 95-25.13: 95-25.19. 

.0308 FINAL PAY FOR SEPAR.ATED EMPLOYEES 

(a) For purposes of G.S. 95-25.7 and these Rules: 



680 



NORTH CAROLINA REGISTER 



October 15, 1998 



13:8 



PROPOSED RULES 



( 1) "Separated employees" are employees whose 
employment has been discontinued either yoluntarily 
or invoiuntarJK for any reason. 

(2) "The next regular payday" is the payday for the pay 
period in which the separated employee's employment 
is discontinued, except for bonuses, commissions and 
other forms of compensation. "The next regular 
payday" for bonuses, commissions and other forms of 
compensation js the first regular payday for the pay 
period in which such wages become calculable. 

(b) If an emploNce requests that the employee's final pa\ check 
be mailed, the employer shall mail the paycheck to the employee 
at the employer's expense. Employers shall not withhold the 
final paycheck because the employee refuses to come to the 
business office or place of employment to pick up the pa\check. 
The employer may req uire the employee to provide a notarized 
or witnessed written request for the mailing of the final 
paycheck. 

[cj If a final paycheck mailed at the employee's request: 



LU 



12) 



Js lost or stolen before the employee receives jt^ the 
employer shall replace the paycheck upon request of 
the employee. The employer shall not deduct costs 
related to replacin g the check without written 
authorization from the employee in accordance with 
Rule .0305 of this Section. 

Is lost or stolen after the employee receives it, the 
employer shall re place the paycheck upon request of 
the employee. The emplox er may deduct costs related 
to replacing the paycheck without a ritten 
authorization from the employee. 

"Costs of replacing the paycheck" shall include the cost of 

stopping payment on the lost or stolen check, 
(d) An employer owes the employee the wages due until the 

employee receives the final paycheck. However, if the check is 

dishonored by the financial institution against which it is drawn. 

then the employer's obligation to pay the wages remains. 



Authority G.S. 95-25.2: 95-25.6: 95-25. 
95-25.19. 



95-25. 7A: 95-25.8: 



.0309 FORM OF PAYMENT OF WAGES 

G.S. 95-25.6 and G.S. 95-25.7 do not require a specific fonn 
of payment. Therefore, the employer ma\ select any legal form 
of payment, so long as payment is made in full on the designated 
payday, subject to authorized deductions and legal withholdings. 
Acceptable forms of payment include cash, money order, 
negotiable checks, and direct deposit into an institution whose 
deposits are insured by the United States government or an 
institution selected by the employee. 

Aiithority'G.S. 95-25.2: 95-25.6: 95-25.": 95-25.19. 

.0310 "OTHER AMOUNTS PROMISED" AS 
WAGES 

"Other amounts promised" as that term js used in G.S. 95- 
25.2( 16) are those amounts which the employer has promised or 
has a policy or practice of paying. These amounts are wages. 



These amounts include, but are not limited to. travel expenses, 
holiday pay, birthday pay, jury duty pay, shift premium pay, 
prizes, moving expenses, educational expenses, or telephone 
expenses. 

Aiirhorm'G.S. 95-25.2: 95-25.6: 95-25.7: 95-25.19. 

SECTION .0500 - JURISDICTION AND EXEMPTIONS 

.0502 COUNTING EMPLOYEES 

(a) For th e purpo se of e stablishing juri s diction pursuant to 
G.S. 95 25.M(b)(5). a propri e tor or owner who works in and 
about his e nt e rpr i s e is not count e d as a p e rson e mploy e d in th e 
e nt e rpris e . 

(b) With respect to a business set up as a corporation, if an 
officer of th e corporation only performs duti e s of an e x e cut i v e 
natur e , h e wil l not be count e d as an employee. How e v e r, if an 
offic e r p e rforms manag e rial or other non execut i v e duti e s, h e is 
an employee of the corporation and will b e count e d for 
jur i sdictiona l purposes. 

fe-) — With r e sp e ct to partn e rships, a pailn e r who has a 
substantial own e rship int e r e st and functions a s a propr ie tor or 
own e r will b e tr e at e d a s an e tnploy e r. — Wh e r e th e partn e rship 
int e r e st and incid e nc e of own e rship authority ar e d e minimis, a 
partn e r will b e count e d as an e mploy ee . 

(d) Part tim e e mploy ee s and family m e mb e rs who work in an 
e nt e rpris e will b e count e d in d e t e miining th e numb e r of p e rsons 
emp l oy e d for juri s dict i onal purpos es . 

fe) — Th e numb e r of e mploy ee s at an e nt e rpris e who work 
during the cours e of a workyveok. not the number of employees 
working on any particu l ar day. deteminos th e wage and hour 
jurisdiction for any workweek. 

Authority G.S. 95-25.14: 95-25.19. 

SECTION .0600 - INVESTIGATION AND 
ENFORCEMENT 

.0602 INVESTIGATIONS 

(a) Inv es tigations will tak e place at such times and in such 
plac es as th e Dir e ctor or Division comp l ianc e offic e r s dir e ct. At 
th e b e g i nning of an inv e stigation, comp l ianc e officers shall 
pr ese nt th e ir cr e d e ntial s to th e own e r, op e rator or ag e nt in charg e 
at th e es tablishm e nt, e xplain th e natur e and purpose of th e 
inv es tigation. — aftd — indicat e — g e n e rally — the — scop e — of th e 
inv e stigation, th e r e cords to b e r e vi e w e d and th e p e rsonnel to b e 
qu es tion e d. The Commissioner shall afford the employer an 
opportunity to bring to the Commissioner's attention any 
information pertinent to the possible violations under 
investigation and any computation of wages possibly due an 
employee. The employer's failure to timely bring to the 
Commissioner's attention such infonnation will not prevent the 
Commissioner from proceeding to a determination. 

(b) Investigations will b e conduct e d s o far as pos si bl e in a 
mann e r which does not unr e asonably di s rupt th e op e rat i on of an 
e mploy e r' s es tabl i shm e nt. The Commissioner shall notify the 
em ployer of the Commissioner's findings jn accordance with 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



681 



PROPOSED RULES 



Rule .0604 of this Section. 

{e) — ln\ e stigations ot" plac e s of e mplo\ m e rit b\ complianc e 
otTic e rs will b e initiat e d b) r e qu e sting voluntan coop e ration 
from th e e mploy e r. — Wh e n an employer r e fus e s to p e nnit a 
complianc e offic e r to e nter and insp e ct an\ plac e of e mploym e nt 
and gath e r th e fact s e s s ential to d e t e rmin e whether or not th e 
emp l ox e r is a co\ e r e d e stabli s hm e nt, or r e fuses to p e rmit a 
com pli anc e offic e r to insp e ct th e plac e of e mploxm e nt. inspe ct 
record s , transcrib e r e cords, question e mploy ee s and i nv e stigat e 
as nec e ssary to determine wheth e r th e e mploy e r has \ iolat e d 
provisions of th e Wag e and Hour .\ct. th e complianc e offic e r 
shall att e mpt to determ i n e th e r e ason for such r e fusal. H e shall 
imm e diat e! ) r e port the facts to th e Wag e and Hour office in 
Ral e igh. — Th e Dir e ctor of th e Wag e and Hour Div ision shall 
attempt to gain voluntan coop e ration from th e e mplov e r. W h e r e 
voluntary insp e ction is not achi e v e d, th e matt e r will b e r e f e rr e d 
to the Chi e f D e putv Commission e r to consid e r an administrativ e 
s e arch warrant. If suffici e nt infomiat i on is availabl e from oth e r 
s ourc e s, th e D e partm e nt max proce e d to n e gotiat e or litigat e on 
b e half of aff e ct e d e mp l ov ee s without furth e r inv es tigation. 

{4) — A t th e co n c lu s i on of th e inv e stigation, th e complianc e 
ofTic e r shall conf e r with th e e mplov e r or his repres e ntativ e and 
advi se him of appar e nt violations and computation s of unpaid 

wages d i sc l os e d b \ th e inv e stigation. During such final 

conf e r e nc e th e e mplov e r will b e afford e d an op p orf - 'nitv to bring 
to th e complianc e offic e r' s att e ntion anv infonnatioi ^e rtin e nt to 
the violations and computations. — At th e conclusion of th e 
conf e r e nc e th e complianc e ofTic e r shall comp le t e , sign and l e av e 
with th e e mplov e r an inv es tigation r e pon which s e ts forth th e 
V iolations found and a back wage summary which computes 
unpaid wag e s ow e d to e mplov ee s bv th e e mplov e r. — The 
complianc e offic e r shall r e qu e st th e e mplov e r to sign th e 



(b) Non compliance bv an e mplov e r in making pavment s to 
th e e mplov ee und e r a plan rend e rs the agreement v oid and the m 
agr ee m e nt mu s t so state. The emplovee and th e commissioner * 
max th e n proc ee d to s ee k all back wag es and damag e s due 
through th e adm i nistrativ e and l e gal m e thods provid e d bx the 
Wag e and Hour Act and the rules and r e gulations promulgated 
th e r e under. 

Authority G.S. 95-25.16: 95-25.1": 95-25.19: 95-25.22. 

.0604 ADMINISTR.ATIVE REMEDIES 

(-a-) — Aft e r inv e stigation and computation of the wages due 
e mplov ees for violation s of G.S. 95 25.3 (Minimum Wag e ). G.S. 
95 25.4 (Overtim e) , a n d G.S. 95 25.6 through G.S. 05 25.12 
(Wag e Paxm en t). th e Wag e and Hour Division shall try to 
discuss th e violations and computation s with th e emploxer and 
trx to r e solv e th e matt e r bx agre e m e nt pursuant to Rul e s .0602 
and .060-1 of this Section. 

(b) If an agreem e nt cannot b e r e ach e d w ith th e e inplox e r. or 
non complianc e bx an e mplox e r nulliti e s an agre e ment, th e 
Dir e ctor of th e Wag e and Hour Div ision or oth e r official acting 
on his behalf shall notify th e e mploxer: 

f+4 that h e max e x e rcis e an opportunity to b e heard xvhich 

con s i s ts of and is e x e rc ise d bx th e m e ans provid e d in 
(c) of this Rul e : 

(3-) that this opportunitx max be waix e d in accordance 

with (d) of this Rul e : and 

fe-) th e nam e , addr e ss and t e l e phon e numb e r of th e 

Dir e ctor of th e Wage and Hour Div ision or oth e r 
official acting on h is behalf whom h e must contact. 
fe4 — Th e e mplox e r's opportunitx to b e h e ard is an informal 
proc e ss xvhich is e x e rcis e d b> communicating his sid e of th e 



investigation r e port. 

( e ) Complianc e offic e rs shall try to r e ach an agr ee m e nt with 
th e e mplov e r conc e rning th e v iolation s and unpa i d wag e s a t the official acti n g on his b e half, bv t e lephon e , i n pe rson or bx letter. 



wage and hour disput e and anx information h e d ee ms p e rtin e nt 
dir e ctlx to th e D i r e ctor of th e Watj e and Hour Division, or an 



final confer e nc e . If th e e mploxer agre es to pax th e back wages 
or s om e ponion of th e m, th e e xp e ct e d dat e of paxm e nt i s to b e 
sp e cifi e d on th e summatA of unpai d wa ge s. I f a s e ttl e m e nt is not 
reached, th e investigation fil e with th e complianc e offic e r's 
r e comm e ndations and conclusion s will b e forxvarded to th e 
Ral e igh otllc e for furth e r action in accordance xvith Rule .0604 
of this S e ction. 

AiithoniyG.S. 95-25.15: 95-25.16: 95-25.1': 95-25.19. 

.0603 SUPERMSION OF PA^ MEM 

(a) Th e Wag e and Hour Div ision max d e v i se . impl e m e nt and 
s up e rv i se a plan for th e pavment of unpaid wag es . .A pax m e nt 
plan should b e in writing and signed bx th e e mplox e r. — T^ 
paxm e nt agr ee m e nt should includ e a waiv e r of th e s tatut e of 
limitations bx th e e mplox e r in th e e vent the agr ee m e nt b e com e s 
void for anx r e ason. .\n e mploxee's sign e d agr ee m e nt to acc e pt 
th e amount sp e cif ie d i n th e plan const i tut es a waiv e r bx th e 
e mplov ee of th e right to bring an action, or to r e quest the 
commission e r to bring an action, in th e G e n e ral Court of .lustic e 
for the unpaid wag e s. — Thi s xvaiv e r bx t he e mplox ee must b e 
stated in th e w ritt e n plan or agreement. 



Wh e n the e mploy e r has so communicat e d to th e Div ision. h e has 

fullv e x e rcis e d his opportun i tx to b e h e ard. 

{V) Upon r e c e iving notic e und e r (b) of this Rul e , if th e 

e mploy e r cannot ad e quat e ly e x e rcis e his opportunitx 
to b e h e ard without mor e tim e to pr e par e or if th e 
Dir e ctor or oth e r official was not availab le , th e 
e mploy e r shall notify th e Wag e and Hour Division by 
t e l e phon e , in p e rson or by l e tt e r w ith in t e n dax s aft e r 
r e c e iving his notic e that h e int e nd s to e x e rci se hi s 
opportunity and s hall r e qu e st th e Division to set a 
tim e p e riod. Thi s pr e v e nts automatic waiv e r und e r (d) 
of this Rul e . 

(24 Upon r e c e iving notice from th e e mplov e r that h e 

int e nds to e x e rcis e his opportunity to b e h e ard, th e 
Dir e ctor or oth e r offic i al acting on his b e half s hal l 
promptlx s e t a reasonabl e tim e p e riod, not to exceed 
4^ — dax s . — during — which — the — e mplox e r — must 
communicat e with th e Division and s hall so notify th e 
e mploy e r. Should th e e mplox e r fail to communicat e 
xvith the Dix ision bx th e e nd of th e tim e p e riod so 
e stablish e d, th e Dir e ctor or oth e r official acting on his 
b e half — may — proceed — te — mak e — at^ — record — a 



682 



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October 15, 1998 



13:8 



PROPOSED RULES 



det e rmination pursuant to ( e ) of this Rul e , or nia\ 
ord e r a continuanc e for just caus e . — Should th e 
e mploy e r fail to e x e rcis e his opportunits to b e h e ard 
following th e granting of on e cont i nuanc e , th e 
e mp l o\ e r' s r e qu es t may be dismiss e d and th e Division 
ma\ proc ee d pursuant to (e) of thi s Rul e . 

(d) Th e e mployer ma> waive his opportunity to b e h e ard by 
s o stating ora l ly or in writing to th e Wag e and Hour Division. 
If th e e mplo\ e r has not e x e rci se d hi s opportunit\ to b e h e ard in 
accordance with (c) of this Rul e within 10 daxs aft e r r e c ei ving 
notice und e r (b) of thi s Rul e , it will be deemed waiv e d. Wh e n 
an emp l oy e r waiv e s his opportunit> to be h e ard, the Divi s ion 
ma\ proc ee d in accordanc e with ( e ) of this Rul e . 

( e ) Onc e th e e mploy e r has had th e opportunit\ to r e solv e th e 
matt e rs at issu e in accordanc e w ith Rul e s .0602 and .0603 of this 
S e ction, and to b e heard in accordanc e with (b). (c) and (d) of 
this Rule, th e Dir e ctor or official acting on his b e ha l f s hall mak e 
and r e cord a determination of the matt e rs. If it is found that th e 
e mploy e r has not violat e d th e Wag e and Hour Act or is not liabl e 
to an e mplovee. th e n th e matt e r wi l l b e dismiss e d. If it i s found 
that th e e mploy e r ha s violat e d th e Wag e and Hour Act or is 
liabl e to an emplove e . all administrativ e r e medies have b e en 
e xhaust e d and th e Dir e ctor or oth e r official acting on his behalf 
sha+k 

f+4 notify' th e employ e r that h e has violated th e Wag e and 

Hour Act and i s liable to an e mplov ee . If th e original 
conclus i ons and computations of th e inv e stigating 
complianc e — offic e r — have — been — mod i fi e d. — these 
modifications wi l l b e sp e cifically s e t out i n this 
not i ficat i on. 

(54 proc ee d in accordanc e with Rul e .0605 of th i s 

S e ction. 

(a) For purposes of G.S. 95-25. 22(g). "exhausting 
administrative remedies" means that the Commissioner shall: 

(1 ) Inv estigate the alleged violations of the Act and afford 
the employer the opportunit\ to present evidence in its 
defense during such investigation: and 

(2) Notif\ the emploxer and complainant! s). after 
completion of the investigation, of: 

(A) The violations found and amounts found due; 
and 

(B) The employer's right to be heard further in the 
matter: and 

(3) Hear any additional evidence presented by the 
employer exercising its right to be heard further as set 
forth in Paragraphs (b) and (c) of ihjs Rule: and 

(4) Notify the employer of any pending action. 

(b) Employers wishing to exercise the right to be heard 
further shall: 

( 1 ) Notify the Commissioner, within 14 days from the 
date the Commissioner notified the employer of the 
findings. The 14 days begins on the date the 
Commissioner mailed notification to the employer 
pursuant to Subparagraph (a)(2) of this Rule. The 
employer may notify the Commissioner either orally 
or in writing. 

(2) Present additional evidence to the Commissioner on 



disputed issues within 14 days from the date the 
employer notified the Commissioner of jts intent to 
exercise the right to be heard further. The employer 
may request an extension of time of no more than an 
additional 14 days. 

(c) The employer shall waive its right to be heard further if jt; 

( 1 ) fails to notify the Commissioner in accordance with 
Subparagraph (b)(1) of thjs Rule: or 

(2) fails to submit evidence in accordance with 
Subparagraph (b)(2) of tliis Rule: or 

(3) agrees to remedy the violations found and to pay in 
full the amounts found due. 

(d) If the employ er presents additional evidence in accordance 
with Paragraph (b) of this Rule, the Commissioner shall notify 
the employer and complainant(s) of any modifications which are 
made to the Commissioner's findin gs. 

(e) For purposes of G.S. 95-25. 22(g) and tfus Rule, the 
Conmiissioner shall make all notifications to tfie iast knoyvn 
addresses of the employer and complainants. 

AiithorinG.S. 95-25.16: 95-25.1': 95-25.19: 95-25.22. 

.0605 LITIGATION 

(a) Th e Commission e r of Labor may bring an action in th e 
G e n e ral Court of Justice to recover unpa i d wag e s du e an 
employee under G.S. 95 25.3 (Minimum Wag e ). G.S. 95 25. 4 
(Ov e rtim e ) and G.S. 95 25.6 through G.S. 95 25.12 (Wag e 
Paym e nt), wh e n: 



(+-) Th e e p i j^loy ee aff e ct e d so r e qu e sts: 

(34 Th e commission e r has e xhaust e d th e administrativ e 

r e m e di es provid e d und e r Rul e .0604 of this S e ction: 

(^-) Th e claims ar e not barr e d by th e two y e ar s tatut e of 

limitations provided in G.S. 95 25.22(f): and 

{4) Th e act i on request e d is not frivolous. 

(b) The Departm e nt of Labor may recommend that employ e es 
maintain th ei r own actions to r e cov e r unpaid wag e s and 
e x e mplarv ' damag e s in th e G e n e ral Court of Justic e . 

fe-) — Complaints by e mploy ee s pursuant to G.S. 95 25.20 
all e ging discharg e or discrimination as a r e sult of filing a 
complaint or part i cipating in an inv e stigat i on or proc ee ding 
und e r th e Wag e and Hour Act hav e priority and will b e 
inv e stigat e d within 30 days by th e Wag e and Hour Divi s ion. 
Results of such investigation will b e report e d promptly to th e 
Commi s sioner for d e termination and l e ga l action. 

(d) If an e mployer violat e s provisions of G.S. 95 25.21. th e 
Commission e r or his d e signat e d r e pr e s e ntativ e may apply to th e 
Magistrat e 's Offic e or District Attorn e y' s Offic e for appropriat e 
action. Such criminal r e dr e ss will b e sought only if th e action of 
an e mp l oy e r int e ntionally and grossly hinders or d e lays th e 
Commission e r — er — h« — d es ignat e d — representativ e — from 
inv e stigating or a s certaining any violations or liability of th e 
e mploy e r und e r th e Wag e and Hour Act. 



Authority G.S. 95-25.15: 95-25.1' 
95-25.21: 95-25.22. 



95-25.19:. 95-25.20: 



SECTION .0700 - CIVIL MONEY PENALTIES 



13:8 



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683 



PROPOSED RULES 



.0701 CIVIL PENALTIES 

(a) An\ emplo\er who \ iolates the provisions of G.S. 95-25.5 
(Youth Emplo\ merit). G.S. Q5-25. 15(b) ( Record Keepirm) or afw 
o f th e ru le s and r e gulat i ons promulgat e d th e r e und e r in this 
Chapte r, these Rules is subject to a civil penalt\ for each 
violation. 

(b) An_\ person or establishment reqtiired to compl\ with or 
subject to regulation of child labor under the F.L.S.A. who 
violates the non-e.\empt prov isions of G.S. 95-25.5. or any of the 
ru l es and r e gulations promulgat e d ther e under i n this Chapter. 
these Rules is subject to a ci\ il penalts for each \ iolation. 



(c) 



Vet 



e amount o f all civi l p e nalti e s 



■M+t 



b e d e t e rmin e d in 



accordanc e with Rul e .0702 of this Section. The Commissioner 
shall determine the amount of al] civ il penalties in accordance 
w ith Rule .0702 of this Section. 

(d) in civil penalty cases, th e Dir e ctor of th e Wag e and Hour 
Division the Commissioner shall notifv the emplover by certified 
mail of the following: 

(1) the nature of the violation; 

(2) the amount of the civil penaltv: and 

(3) that the civil penalty de t e rminat i on will become be 
final, unless within 15 davs aft e r r e c e iving notic e 
th e r e of th e e mplov e r charg e d v\ ith a violation and 
p e naltv tak es e xc e ption to th e d e t e rmination: and the 
emplover takes exception to tHe penalt\' as set forth in 
G.S. 95-25.23 and G.S. 95-- \ of the penaltv from 
the Commissioner. 

f4-) th e proc e dure for taking e xc e ption a s provid e d in Rul e 

.0703 of this S e ction. 
fe^ — If the e mployer has not filed an e xc e ption to th e civil 
p e naltv vs ithin 1 5 days aft e r r e c e iv ing notic e in accordanc e vv ith 
(d) of this Ru le , th e p e nalty a s s e ssm en t bv th e Director b e com e s 
th e final determination of th e Commi s sion e r of Labor. 

Aiithorin-G.S. 95-25.5: 95-25.14: 95-25.1': 95-25.19: 95- G.S. 
25.23: 95-25.23.4. 

.0702 CIVIL PENALTY ASSESSMENT 

(a) If upon inspection or inv e stigation, th e Dir e ctor the 
Commissioner finds that an emplover has violated anv of the 
prov isions of G.S. 95-25.5. G.S. 95-25. 15(b) or th e rul e s and 
r e gu l ations is s u e d ther e under these Rules, th e Dir e ctor of th e 
Wag e and Hour Div i sion the Commissioner may assess a civil 
penaltv for each violation. 

(b) The maximum amount of a civil penalt) will be based on 
the nature and the grav it> of the violation or violations. Matters 
which are indications of the gravitv of a violation and which 
justify maximum civil p e naltv assessm e nt s ar e include, but are 
not limited to: 



(1) 

(2) 

(3) 
(4) 



the likelihood of injur, and the seriousness of the 

potential injuries to which a youth has been exposed; 

multiplicity of multiple violations bv a business or 

emplover; 

recurring violations; 

emplovment of any youth in a hazardous or 

detrimental occupation without a vsaiver from the 

Commissioner; 



(5) violations involving vouths underl4 years of age; age. 

^ a substantial numb e r of hours worked in e xc e ss of the ■ 

s tatutorv limit s . ' 

(c) If an e mploy e r violat e s this Chapter bv' e mploying a youth 
vsithout a youth empl ovment certificate, a p e naltv for this 
particu l ar vio l ati o n The Commissioner shall assess a penalty of: 

LU two hundred fifty dollars (S250.00) will be assessed 
if the a youth emplovment certificate v\ ould not have 
been issued because the emplovment was for a 
hazardous or detrimental occupation; occupation. 

(2) a — p e nalt> — ef one hundred tvventv-five dollars 
(SI 25.00) wi l l b e ass e ss e d if the certificate would not 
have been issued, but the employment was 
non-hazardous or non-detrimental. 

(3) If a c e rtificat e would hav e been issu e d, a p e nalty of 
fifty dollars ($50.00) will b e a s s e ss e d for failure to 
hav e or if a certificate would have been issued but the 
emplover did not have or maintain the certificate. 

(d) Reductions in the penaltv amount may be made based on 
the size of a business (number of emplovees and gross volume) 
and its past record of compliance with v o uth e mplovm e nt 
r e quir e m e nts the Wage and Hour Act. 

.-iiilhorinG.S. 95-25. T: 95-25.19: 95-25.23: 95-25. 23A. 

SECTION .0800 - RECORDKEEPING 

.0803 SCOPE OF PROMISED WAGES 

For the purposes of G.S. 95-25. 1 3. the tenn " promised wages" 
includes all f'omis of yyages as defined in G.S. 95-25. 2( 16). and 
anv policv or practice that mav affect the rate, amount or 
pavment of wages. 

.Authority G.S. 95-25.2: 95-25.13: 95-25.19. 

.0804 NOTIFICATION AT TIME OF HIRING 

(a) An emplovee's signature on an emplover's written notice 
of the promised wages which bears the date on vshich the 
emplovee was provided with the notice shall be presumptive 
evidence of the emplover's notification in accordance with G.S. 
95-25.13(1) and this Rule. 

(b) A policv or practice which decreases the emplovee's 
wages or has the effect of decreasing the emplovee's wages shall 
not appiv to any emplovee until after the emplovee has been 
provided with specific oral or written notice of the policv or 
practice. 

.4iitliorit}G.S 95-25.13: 95-25.19. 

.0805 NOTIFICATION DURING EMPLOYMENT 

(a) Employers shall satisfS the notice requirements of G.S. 
95-25.13(2) by posting or making available to its emplovees in 
v\riting all policies and practices relating to promised wages in 
a manner, place and time which ensures that emplovees have 
readv access to those policies and practices throughout their 
tenure with the emplover and are able to use that information. 

(b) Acceptable means of ensuring that the policies and 



684 



NORTH CAROLINA REGISTER 



October 15, 199H 



13:8 



PROPOSED RULES 



practices are readily accessible to the employees include, but are 
not limited to: 

( 1 ) Providing employees with an up-to-date emplo\ee 
handbook or other written statement of policies and 
practices with regard to promised wa ges: 

(2) Proyiding emplosees with paNToll records, including 
check stubs, for wages promised in the fonn of hourly 
pa\' or salary or other form \\hose terms are readiK 
identifiable from the pavroll records. 

(c) The emplo\er shall pay the promised wages to the 
employee e\en if the employer has failed to comply wjth the 
requirements of G.S. 95-25.13(2). For purposes ot~ G.S. 95- 
25.13(2) and these Rules, "promised y\ages" includes yvages 
promised in accordance w ith an unwritten policy or practice y\ ith 
regard to the v\ages. The only exception to this Rule js that an 
employer shall not enforce an uny\ritten policy or practice 
resulting jn the loss or forfeiture of vacation time or pay, 
commissions, bonuses or other forms of calculation. The 
employer shall not deny to any employee any vacation time or 
pay, commissions, bonuses or other forms of calculation on the 
basis of the application of an unwritten forfeiture or loss policy 
or practice. 

Authorises. 95-25.6: 95-25.": 95-25.13: 95-25.15: 95-25.19. 



as 13 NC.4C 13 .0-106. .0409. Notice of RuL'-muking 
Proceedings was published in the Register on August 3. 1 998. 

Proposed Effective Date: April 1. 1999 

A Public Hearing will he conducted at 2:00 p. tn. on November 
2. I99H at 4 West Edenton Street, Room 249. Raleigh. NC 
2'601. 

Reason for Proposed Action: To niodifi- the requirement for 
manual resets on high limit controls to apply to high pressure 
boilers only. 

Comment Procedures: Written comments Mill be accepted 
through 5:00 p.m. on November 16. 1998. Written comments 
must be delivered or mailed to Ann B. Wall. NC Department of 
Labor 4 West Edenton Street. Raleigh. NC 2~601. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of state or local government funds. These Rules do not 
have a substantial economic impact of at least five million 
dollars (S5. 000.000) in a 1 2-month period. 

CHAPTER 13 - BOILER AND PRESSURE VESSEL 



.0806 MEANING OF "MAINTAINED IN A 
PLACE ACCESSIBLE" 

For the purposes of G.S. 95-25.13(2) and (3) and these Rules, 
the phrase "maintained ]n a place accessible" applies to the 
posting and to the writing. "Accessible" with respect to posting 
means "easily approached and vieysed for reading." at a place 
designated for such purposes and regularly frequented tn the 
affected employees. "Accessible" with respect to the writin g 
means "easily and promptly obtained or yievved for reading" at 
a place designated for maintaining such writings. 

Authority- G.S 95-25.13: 95-25.19. 

.0807 METHODS OF PROVIDING EMPLOYEES 
WITH ITEMIZED STATEMENT OF 
DEDUCTIONS 

The employer may provide the itemized statement required by 
G.S. 95-25.13(4) of deductions under G.S. 95-25.8: 

( 1 ) in writing: or 

(2) by electronic mail, but only if such a transmission is 
capable ot" being printed out as a paper copy by the 
employee: or 

(3) by any other means yvhich supplies the required 
information in a form the employees can retain in 
written form. 

Authority' G.S. 95-25.13: 95-25.19. 



SECTION .0400 - GENERAL REQUIREMENTS 

.0406 HIGH PRESSURE OR TEMPERATURE 
LIMIT CONTROL 

(a) Each automatically tired boiler or pressure vessel shall be 
protected from overpressurization by tyvo pressure or 
temperature operated controls yvhich monitor the upper pressure 
or temperature of the ysater. steam, or other fiuid in the boiler or 
pressure vessel. At least one of the controls shall be yvired to 
interrupt the fuel supply to the burner and stop burner operation, 
or for electric boilers to inten'upt the electrical supply to the 
heating elements or electrodes, before the maximum pressure or 
temperature is exceeded. One of the controls may be used as a 
nomial operating control. 

(b) In a multiple boiler or pressure vessel installation, where 
the pressure or temperature actuated operating control may be 
installed in a header or other point common to all boilers and 
pressure vessels in the installation, and can be isolated from any 
of the boilers or pressure vessels in the installation, the owner or 
user shall equip each boiler or pressure vessel with at least one 
high-limit control. 

(c) For ail high pressure boilers installed after Januan 1. 
1 995, and for all high pressure boilers after January 1 , 2000, the 
high limit control shall be equipped with a manual reset which 
shall prevent the boiler from being fired after the maximum 
temperature or pressure has been reached until the operator 
resets the switch manually. 



N 



otice is hereby given in accordance with G.S. 150B-21.2 
that the Department of Labor intends to amend rules cited 



Authorit\-G.S. 95-69.11: 95-69.14. 



.0409 



AUTOMATIC LOW-WATER FUEL CUTOFF 



13:8 



NORTH CAROLINA REGISTER 



October 15, 199H 



685 



PROPOSED RULES 



AND WATER-FEEDING DE\ ICE 

(a) Each automaticall\ fired steam or \apor s>stem boiler, and 
each hot water heating boiler or hot water suppi\ boiler ha\ing 
a minimum safet> \ ah e relie\ ing capacity greater than 400.000 
Btu hr. shall be equipped with an automatic low -water fuel 
cutoff so located as to automaticall_\ cut oft" the fuel suppl> and 
stop the operation of the burner before the surface of the water 
falls to the lowest safe water line. For electric boilers, the 
low-water fuel cutoff shall cut off the electrical suppl\ to the 
electric elements or electrodes. The lowest safe water line shall 
be that le\el identified b\ the manufacturer which indicates the 
lowest safe water le\el for safe operation of the boiler. Low 
water fuel cutoff de\ ices embod\ing a float and float bowl shall 
be installed so that the boiler feedwater or makeup water can not 
be introduced through the float chamber. 

(b) Steam and \apor boilers fired b\ the combustion of fuels 
and installed after January 1. 1995 and all steam and xapor 
boilers fired b> the combustion of fuels after Januar\ 1. 2000 
shall be protected b> two low -water fuel cutoffs, one of which 
ma\ also be used to regulate the normal water le\el. 

(c) The low -water fuel cutoff shall be attached directl_\ to the 
boiler or to the water column. Piping from the boiler shall be not 
less than one-half inch nominal pipe size. The ends of all 
nipples shall be reamed to full-size inside diameter. The 
low -water fuel cutoff insta' led in a water boiler s>stem ma\ be 
installed an\ where in the s> "m so long as there is no isolation 
\al\e installed between the de\ice and the boiler. 

(d) For steam and \apor sxstem boilers, low-water fuel cutoff 
designs embodying a float and float bowl shall ha\e a \ertical 
straightawa\ \aKe drain pipe at the lowest point in the 
water-equalizing pipe connections b> which the bowl and the 
equalizing pipe can be flushed and the de\ ice tested. 

(e) A coil t>pe boiler or a watertube boiler requiring forced 
circulation to pre\ent o\erheating of the coils or tubes ma\ ha\e 
a flow-sensing de\ice installed at or near the boiler proper, in 
lieu of a low-water fuel cutoff, to automaticalK cut off the fuel 
suppK when the circulation of flow is interrupted. 

(f) For all high pressure boilers installed after Januar\ I. 
1995, and for all high pressure boilers after Januan. I. 2000. for 
which a low-water fuel cutotTis required b\ this Chapter, at least 
one of these de\ ices shall be equipped with a manual reset which 
shall pre\ent the boiler from being fired after a low -water 
condition until the operator resets the switch manualK. 

(g) Automaticall\ fired boilers installed after Januan 1. 1995 
and all automatically fired boilers after Januar> 1 . 2000 shall be 
pro\ ided with a s\stem to automaticall> maintain a constant 
water level so that the water le\el can not fall below the lowest 
safe water line. 

AiilhorinG.S. 95-69.14. 

Notice Is hereby given in accordance with G.S. 150B-21.2 
iluii ilie Department of Labor intends to adopt rules cited 
as 13 \C.-iC 19 .0101 - .0102. .0201. .0301 - .0302. .0401 - 
.0402. .0501 - .0502. .0601 - .0605. .O'Ol - .0~02. Xotice of 



Rule-making Proceedings was published in the Register on 
.4ugusi 3. 1998. 

Proposed Effective Date: .April 1. 1999 

A Public Hearing will be conducted at 10:00 a.m. on .\ovember 
9. 1998 at .Administrative Office of the Courts Classroom. 322 
Chapanoke Road. Raleigh. SC 2''603. 

Reason for Proposed .Action: To adopt a set of guidelines for 
the initiation, processing, and closing of complaints filed 
pursuant to the Retaliatory Employment Discruuinaiion Act. 
found at Article 21 of Chapter 95 of the Xonh Carolina General 
Statutes. 

Comment Procedures: Written comments will be accepted 
through 5:00 p.m. on Sovember 16. 1998. Written comments 
must be delivered or mailed to .Ann B. Wall. \C Department of 
Labor 4 JVest Edenton Street. Raleigh. .\C 2'60!. 

Fiscal Note: These Rules do not affect the expenditures or 
re\-enues of state or local government funds. These Rules do not 
have a substantial ecotmmic impact of at least five million 
dollars I S5. 000.000) in a 12-month period. 

CHAPTER 19 - RETALIATORY EMPLOYMENT 
D1SCRIMIN.4TION 

SECTION .0100 - GENERAL PROVISIONS 



.0101 WORKPLACE RETALIATORY 
DISCR1MIN.4TION OFFICE 

The main office of the Workplace Retaliaton. Discrimination 
(WORD) Office, which administers the pro\isions ot~ Article 21 
of G.S. 95. the Retaliaton Emploxment Discrimination Act 
(RED.A). is maintained in the Raleigh office of the Department 
of Labor (the Department) at the Old Re\enue Building. 2 South 
Salisbury Street. Raleigh. North Carolina. The W ORD Office 
maintains branch offices jn Greensboro and Charlotte. North 
Carolina. The mailing address of the main office is: 

Workplace Retaliatory Discrimination Office 
North Carolina Department of Labor 
2 South Salisbury Street 
Raleigh. North Carolina 27601 



Authority G.S. 95-245. 

.0102 FOR.MS 

Copies ot' current forms used by the WORD Office are 
available from the Raleigh office. 

Authorin- G.S. 95-245. 

SECTION .0200 - DEFINITIONS 

.0201 DEFINITIONS 



686 



NORTH CAROLISA REGISTER 



October 15, J99S 



13:8 



PROPOSED RULES 



The foUouing definitions are applicable throughout this 
Chapter: 

( 1) "Complainant" is a person aliegedh aggrieved bv a 
violation of G.S. 95-241. who files a written 
complaint with the WORD Office. 

(2) "Employee" means those individuals protected from 
discrimination or retaliation b\ G.S. 95-241. and 
includes but ]s not limited to those individuals defined 
as employees in G.S. 97-2(2). G.S. 95-25.2(4). G.S. 
95-127(9). miners as defined in OS, 74-24.2. 
temporary, leased, or loaned employees, former 
employees, jointly employed employees, common layv 
employees, and applicants. 

(3) "Intervieyy" as used in these Rules includes privately 
speaking yvith an employee or witness on company 
time on the company premises. 

(4) "Open or pending [n the trial court division" as set 
forth in G.S. 95-242(e) means the period beginning 
with the filing of a written complaint y\ith the 
Department and ends with either the Commissioner's 
receipt of a final determination by the trial court on 
the Commissioner's civil action or closure of the file 
according to these Rules, whicheser occurs later. 

(5) "Protected activity" or "activity" shall mean and 
include all the actions set forth in G.S. 95-24 1(a) and 
G.S. 127A-1I1. 

(6) "Respondent" is a person, as defined jn G.S. 95- 
240( 1 ). against whom a REDA complaint is filed. 

Authonn-C.S. 95-245. 



.0302 FILING OF COMPLAINTS 

(a) A complaint is filed when it is received bv the WORD 
Office. The complaint, faxed complaint, amendments, written 
authorizations, and faxed authorizations must be received by the 
WORD Office yvithin 180 days of the alleged violation. 

(b) A complaint may be filed by facsimile as long as a signed 
paper copy is received bv the WORD Office yvithin 10 calendar 
days of transmittal ot' the fax, if a signed paper copy oi' the 
complaint is not received as set foith in thns Rule, the faxed 
complaint is subject to administrative closing as set out in these 
Rules. 

(c) If a complaint is filed by anyone other than the 
complainant, including an attomey. the WORD Office must 
receive a written authorization, dated and signed by the 
complainant alloy\ing such person to file the complaint on the 
complainant's behalf The written authorization must be 
receiyed by the WORD Office within fO calendar days of receipt 
of the complaint. Such complaints not followed by written 
authorization are subject to administrati\e closing as set out in 
these Rules. 



(d) A written authorization may tie filed by facsimile as long 
as a signed paper copy is received by the WORD Office y\ithin 
10 calendar days of transmittal of the fax. If a signed paper copy 
of the written authorization is not received as set forth in this 
Rule, the complaint is subject to administrative closing as set out 
in these Rules. 

(e) Computation of time for filing and other deadlines shall 
be in accordance with G.S. 1 A-1. Rule 6(a). 

AuthonnG.S. 95-245. 



SECTION .0300 - INITIATION OF COMPLAINT 



SECTION .0400 - CONDUCT OF INVESTIGATIONS 



.0301 CONTENTS OF COMPLAINT 

(a) A complaint filed by or on behalf of a complainant must 
contain the following information: 



Name and address of the complainant: 

Name and address ot" the respondent, or other 

information y\hich sufficiently identifies the 

respondent: 

Description of protected activin. trait or status 

covered bv REDA; 

Description of alleged retaliatory or discriminatory 

action; 

Approximate date of alleged retaliatory or 

discriminatory action; and 

Signature of complainant either on complaint fonn or 

on supporting documentation allow ing the complaint 

to be filed on behalf of complainant. 

(b) The complaint may be amended as needed to meet these 
requirements. 

(c) Complaints and amendments may be filed on a WORD 
form or other document containing the information in Paragraph 
(a) of this Rule. 

.Author in- G.S. 95-245. 



ill 

(2} 



ill 
ill 
i2l 
16} 



.0401 INVESTIGATION 

(a) The Commissioner may, in addition to other actions, 
intervieyy witnesses, examine and obtain copies of documents, 
and visit yvorkplaces in determining whether or not there is 
reasonable cause to believe that the allegations of the complaint 
are true. 

(b) The respondent has 30 days from notification of the 
complaint to respond to tlie allegations of the complaint. The 
respondent's failure to timely respond shall not prevent the 
investigation from proceeding to a determination. 

(c) The complainant shall cooperate during the course of the 
investigation. Cooperation shall include, but is not limited to: 

( I) notifying the WORD Office, as soon as possible, of 

changes in address, name or telephone number; 

providing all infomiation requested by the investigator 

in the time and manner specified by die investigator; 

attending aM meetings or conferences scheduled by 

the in\estigator: 

meeting reasonable deadlines established by the 

investigator; 

returning required forms; and 

returning telephone calls. 
Failure to cooperate may result in dismissal of the complaint 
pursuant to Rule .0603 of this Chapter. 



i21 

13J 

ill 

ill 
t6j 



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October 15, 1998 



687 



PROPOSED RULES 



AiiihoriiyG.S. 95-245. 

.0402 INTERVIEWS 

(a) All witnesses shall be interviewed in private, except as 
pro\ided in Paragraphs (b) and (c) of this Rule. 

(b) Witnesses ma\ be accompanied by their own attorney. 
representative, or interpreter. 

(c) Witnesses whose statements can legalK bind the 
respondent ma\ also be accompanied by the respondent's 
attorncN. at the option of the witness. 



(2) Complainant's failure to cooperate during the 
investigation. 

Author in- G.S. 95-245. 

.0604 RIGHT-TO-SUE CLOSURE 

Upon the issuance of a right to sue letter, the Commissioner 
shall close the case file. 

Author in- G.S. 95-245. 



i 



Aiahoniy G.S. 95-245. 

SECTION .0500 - RIGHT TO SUE LETTERS 

.0501 RIGHT TO SUE LETTERS 

A riaht-to-sue letter ma\ be requested b\ the complainant after 
a detemiination ot' reasonable cause to believe that the 
allegations of the complaint are true and notice of conciliation 
failure. The req uest ma\ be granted unless the Commissioner 
intends to seek an injunction. Jf the request for a right-to-sue 
letter is granted, the case shall be closed. 

Authority G.S. 95-245. 

.0502 REQL STS FOR RIGHT-TO-SUE LETTERS 

Requests for right-to-sue letters made under G.S. Q5-242(c) 
shall not be accepted until 180 days after the Filing of the 
complaint. 



.0605 SETTLEMENTS 

Upon settlement of the case and compliance with the tenns of 
any approved settlement agreement, the Commissioner shall 
close the case file. 

.Authority- G.S. 95-245. 

SECTION .0700 - SETTLEMENT AND LITIGATION 

.0701 SETTLEMENT 

Except in those cases where the complaint has been 
withdrawn, or a right-to-sue letter has been issued, the 
Commissioner shall be made a part\ to all settlements. Upon 
compliance with the terms ot' a settlement agreement, the 
Commissioner shall issue notification to all parties and close the 
case file. 

Author in- G.S. 95-245. 



Authority G.S. 95-245. 

SECTION .0600 - CLOSING OF CASES 

.0601 ADMINISTRATIVE CLOSINGS 

A complaint mav be administratively closed without 
investigation if it does not contain the information specified in 
Rule .0301 ot' this Chapter. In the event that the case is 
administratively closed, the intended respondent shall not be 
notified and the complainant shall not receive a right-to-sue 
letter. 

Authority G.S 95-245. 



.0702 LITIGATION 

In determining w hether to file a civil action or issue a right-to- 



sue letter, the Commissioner shall consider the interests of both 
the public and the individual complainant, if the Commissioner 
elects to Hie a civil action, the Commissioner shall control all 
aspects of tlie litigation, which shall include the acceptance of 
any proposed settlement. 

Authority G.S. 95-245. 



TITLE I5A - DEPARTMENT OF ENVIRONMENT 
AND NATURAL RESOURCES 



.0602 WITHDRAWALS 

The complainant mav withdraw the complaint, in writing, at 
any time prior to the Department's determination that there is 
reasonable cause to believe that the allegations of the complaint 
are true. 



Notice is hereby giyen in accordance with G.S. I5IIB-2 1.2 
that tlie DESK - Soil and Water Consen-ation Commission 
intends to amend rule cited as 1 5.4 S'C.A C 6E .OIQ~. Sotice of 
Rule-making Proceedings was published in the Register on April 
15. 1998. 



Authority G.S. 95-245. 

.0603 RIGHT-TO-SUE DISMISSALS 

Complaints may be dismissed and a right-to-sue letter issued 
for tlie following reasons: 

( 1 ) InsutTicient evidence to support the allegations of the 
complaint; or 



Proposed Effective Date: April I. 1999 

Instructions on How to Demand a Public Hearing Ouust be 
requested in writing within 15 days of notice): .Any person 
requesting that the Soil and liiiter Conseryation Commission 
conduct a public hearing on this proposed amendment must 
submit a written request by October 30. 199S to lemon Cox. 



688 



NORTH CAROLINA REGISTER 



October 15, 1998 



13:8 



PROPOSED RULES 



Division of Soil & Water Conservation. PC) Box 2^68"^. 

• Raleigh, NC 27611. The rujiiest must specify whicli rule the 
hearing is being request on. /( 'ritten requests submitted by mail 
must be postmarked no later than October 30. 1998. 

Reason for Proposed Action: The rules for the Agriculture 
Cost Share Program require an annual spot check of all animal 
waste systems funded by the Program for the first five years 
after implementation. Because the Division of Soil and Water 
Consernition and the Division of Water Qualit}' are already 
conducting an annual review atid inspection of systems required 
to have a certified waste management plan, the annual check by 
the District is no longer necessary to ensure their proper 
operation and maintenance. This rule change would include 
waste management systems as part of the annual five percent 
spot checks that are currently conducted of all cost shared 
practices, unless the operation does not have a certified waste 
management plan. Cost shared M'aste management practices 
for operations under the threshold for requiring annual 
inspections and operation reviews, and any other .systems not 
requiring a certified plan, would continue to be reviewed 
annually for the first five years after implementation 

Comment Procedures: .411 persons interested in this proposed 
amendment are encouraged to submit written comments. 
Comments must be postmarked by November 16. 1998 and 
submitted to lemon Cox. Division of Soil ct- Water 
Consen-ation. PO Box 27687. Raleigh, NC 27611. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of state or local g( vernment funds. These Rules do 
not have a substantial eco::omic impact of at least five million 
dollars (85.000.000) in a 12-month period. 

CHAPTER 6 - SOIL AND WATER CONSERVATION 
COIV1IVIISSION 



SUBCHAPTER 6E - AGRICULTURE COST SHARE 

PROGRAM FOR NONPOINT SOURCE 

POLLUTION CONTROL 



SECTION .0100 



AGRICULTURE COST SHARE 
PROGRAM 



.0107 COST SHARE AGREEMENT 

(a) The landowner shall be required to sign the agreement 
for all practices other than conservation tillage and land 
application of animal wastes. An applicant who is not the 
landowner may submit a long term written lease or other legal 
document, indicating control over the land in lieu of the 
landowner's signature, provided the control runs the length of 
the life of the practice as listed in the respective Program 
Year's Implementation Plan. Signature on the agreement 
constitutes responsibility for BMP maintenance and 
continuation. 

(b) As a condition for receiving cost share or cost share 



incentive payments for implementing BMP's. the applicant 
shall agree to continue and maintain those practices for the 
minimum life as set forth in the Detailed Implementation Plan, 
effective the date the BMP's are implemented. 

(c) As a condition for receiving cost share payments, the 
applicant shall agree to submit a soil test sample for analysis 
and follow the fertilizer application recommendations as close 
as reasonably and practically possible. Soil testing shall be 
required a minimum of every two years on all cropland 
affected bv cost share payments. Failure to soil test shall not 
constitute noncompliance with the cost share agreement. 

(d) As a condition for receiving cost share pa>ments for 
waste management systems, the applicant shall agree to have 
the waste material anaKzed once ever> vear to detemiine its 
nutrient content. If the waste is land applied, the applicant 
shall agree to soil test the area of application and to appl> the 
waste as close as reasonabK and practicalK' possible to 
recommended rates. When waste is land applied, waste 
anaKsis and soil testing shall be conducted annually. 

(e) The technical representative of the district shall 
determine if the practice(s) implemented have been installed 
according to specifications as defined for the respective 
program year in the USDA-Natural Resources Conservation 
Service Technical Guide. Section IV. Raleigh. North Carolina, 
or according to specifications approved by the division for 
district BMP's. The district shall be responsible for making an 
annual spot check of five percent of ail the participating farms 
to ensure proper maintenance. Waste manag e m e nt syst e ms 
will r e c e iv e annual status r e views for five years following 
imp l em e ntation. Waste management systems shall be 
included as part of the annual five percent check except for 
systems on farms without certified waste management plans. 
in those cases, the systems will receive annual status reviews 
for five years following implementation. 

(f) If the technical representative of the district determines 
that a BMP for which program funds were received has been 
destroyed or has not been properly maintained, the applicant 
will be notified that the BMP must be repaired or re- 
implemented within 30 working days. For vegetative 
practices, applicants are given one calendar year to re- 
establish the vegetation. The district may grant a prescribed 
extension period if it determines compliance can not be met 
due to circumstances bevond the applicants control. 

(g) If the practices are not repaired or reimplemented 
within the specified time, the applicant shall be required to 
repay to the division a prorated refund for cost share BMP's as 
shown in Table 1 and 100 percent of the cost share incentive 
payments received. 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



689 



PROPOSED RULES 



Table 1 

PRORATED REFUND SCHEDULE FOR NONCOMPLIANCE 

OF COST SHARE PAYMENTS 



{ 



Percent Age of Practice Life 

10 
20 
30 
40 
50 
60 
70 
80 
90 
100 



Percent Refund 
100 
95 
89 
82 
74 
65 
55 
44 
31 
17 




(h) An applicant, who has been found in noncompliance 
and w ho does not agree to repair or reimplement the cost 
shared practices, and a District ma\ jointl) request the 
commission to infomialK mediate the case. To invoke this 
method of mediation, both parties must stipulate that the 
commission mediation is binding. 

( i ) An applicant shall have a maximum of 1 80 davs to make 
repav. "nt to the division follow ing the final appeals process. 

(j) The inabilitv to properK maintain cost shared practices 
or the destruction of such practices through no fault of the 
applicant shall not be considered as noncompliance with the 
cost share agreement. 

(k) When land under cost share agreement changes owners 
the nevs landowner shall be strongK encouraged bv the district 
to continue and maintain practice(s) previously implemented. 

Authority U.S. 139-8: 145-215. '4. 



TITLE 17 - DEPARTMENT OF REVENUE 

Notice is hereby given in accordance with G.S. 150B-21.2 
that the Department of Revenue intends to amend rules 
cited as H NCAC 4B .0302.'. 0306. .0308. .0310 -.0312. .2902. 
.2903: 4E.0201. .0302. .0'03: 4F .0005: and repeal 4B .0102. 
.0104 -.our. .0301. .0309. .0403. .0405. .4301. .4302: 4E 
.0102. .0103. .0202. .0203. 

Editor's Note: G.S. 150B-lld)(4) exempts the Department of 
Revenue from Part 2 Article 2A of Chapter 150 with respect to 
the notice and hearing, requirements. The Department will 
however publish the text of proposed rules in the Sorth Carolina 
Register prior to the scheduled time of review by the Rules 
Review Commission. 

Proposed Effecti\ e Date: 

r SC.AC 4B.0102. .0104 -Onr. .0301. .0302. .0306. .0308- 
.0312. .0403. .0405. .2902 - .2903. .4301 - .4302 - July I. 1999 
r \CAC 4E .0102 - .0103. .0201 - .0203. .0302. .0'03: 4F 



.0005 - May 1. 1999 

Instructions on How to Demand a Public Hearing imust be 
requested in writing within 15 days of notice): A person may 
request a public hearing by sending a written request for a 
hearing to Mr Jay Hare. Corporate. Excise, and Insurance Tax 
Division. PO Box 871. Raleigh. NC 27602-871. by November 
16. 1998. Notice of any hearing scheduled on these proposed 
repeals will be published in the Register 

Reason for Proposed .Action: 

/ 7 NCAC 4B .0102, .0104 - .0107 - Senate Bill 1252 revised 
the State privilege license taxes. The revisions repealed the pro- 
ration of tax. repealed the license tax (but not the gross receipts 
tax associated with the license), and consolidated the 
exemptions into one statute. The rules that are repealed here 
either conflict with or restate the revisions and are therefore 
either obsolete or unnecessaiy. 

17NCAC4B .0301 - Senate Bill 1252 revised the State privilege 
license taxes. The revisions repealed the pro-ration of tax. 
effective July 1. 1999. This rule will therefore be obsolete on 
that date. 

1 7 NCAC4B .0302 - Senate Bill 1252 revised the Slate privilege 
license taxes. The revisions repealed the pro-ration of tax. 
repealed the license tax (but not the gross receipts tax 
associated with the license), and consolidated the exemptions 
into one statute. Many privilege license rules are no longer 
needed as a result of that legislation. This amendment 
consolidates this rule and 4B . 0403 and . 0405 so the remaining 
rules will not be so scattered in the Code. 
17 SC.AC 4B.0306 - Senate Bill 1252 consolidated and revised 
the exemptions to the State privilege license taxes This 
atnendtnent reflects those changes. 

1 7 NC.4C 4B .0308. .0310 - .0312 - Senate Bill 1252 repealed 
the State license tax for most of the privilege license taxes, 
leaving the gross receipts tax on amusements. These rules are 
amended to delete references to the obsolete license tax. 
17 .\CAC 48 .0309 - Senate Bill 1252 revised the Stale 
privilege license taxes. The revisions repealed the pro-ration of 



690 



NORTH CAROLINA REGISTER 



October 15. 199H 



13:8 



PROPOSED RULES 



tax. repealed the license tax (hut not the gross receipts tax 
associated with tlie license), and consolidated the exeirptions 
into one statute. Many privilege license tax rules are no longer 
needed as a result of that legislation. Some of the remaining 
rules are being consolidated so the rules will not be so 
scattered. This rule is repealed because it is incorporate in 
amended 4B.030S. 

1 7 AC.-IC 4B .0403, .0405 - Senate Bill 1252 revised the state 
privilege license taxes. The revisions repealed the pro-ration of 
tax. repealed the license tax ( but not the gross receipts lax 
associated with the license), and consolidated the exemptions 
into one statute. Many privilege license tax rules are no longer 
needed as a result of that legislation. These rules are repealed 
because their content is consolidated with revised rule 4B. 0302 
so the remaining rules will not be so scattered in the code. 
1 7 SCAC 4B .2902 -.2903 - Senate Bill 1252 revised the Sate 
privilege license taxes. The revisions repealed the license 
portion of the installment paper tax and increased the 
installment paper percentage tax rate to keep the tax revenue 
from the tax the same. The changes to these rules reflect the 
changes made by the legislation. 

1 7 .\C.4C 4B .4301 - .4302 - Senate Bill 1252 revised the State 
privilege license taxes. The revisions repealed the pro-ration of 
tax. repealed the license tax (but not the gross receipts tax 
associated with the license), and consolidated the exemptions 
into one statute. .4s a result of that legislation, all the privilege 
license lax rules were reviewed. These two rules repeat the 
statutes for the most part and are unnecessaiy even if they were 
not ref ctitious. 

1 7 SCAC4E.OI02 - .0103 - Senate Bill 1252 repealed the beer 
and wine privilege license taxes, effective May 1, 1999. end left 
in place the beer and wine excise taxes. These rules adcress the 
beer and wine privilege license taxes and are therefore obsolete. 
1 7 ^CAC 4E. 0201 - Senate Bill 1252 repealed the Slate beer 
and wine privilege taxes, effective Ma}- 1. 1999. and left the beer 
and wine excise taxes. This rule needs to be changed to reflect 
these changes and to correct the name of the Division within the 
Department that receives the beer and wine tax reports. 
1 7 ^C.AC 4E.0202 - .0203 - Senate Bill 1252 repealed the beer 
cmd wine privilege license taxes, effective May 1. 1999. and left 
in place the beer and wine excise taxes. .4s a result of that 
legislation, all of the beer and wine privilege license and excise 
tax rules were reviewed. These two rules are repetitious of the 
statutes for the most part and the part in .0202 about the 
Examiner's report is out-of-date. The rules therefore need to be 
repealed. 

1 7 ISCAC 4E.0302 - This is a technical change to eliminate the 
double reference to taxpaid beverages. 

17 .\C.4C 4E .0703 - This amendment deletes the word "malt" 
and substitutes the word "beer". 

17 ISCAC 4F .0005 - This amendment revises the statute to 
reflect changes made to the law since 1991. 

Comment Procedures: liritten comments may be submitted to 
Mr Jay Hare at .\orth Carolina Department of Revenue. 
Corporate, Excise, and Insurance Tax Division, PO Box 871, 



Raleigh. NC 2' 602. Comments received will be taken into 
consideration. Ifvou have questions, vou mav call Mr Hare at 
919--33-1352. ' ' 

CHAPTER 4 - LICENSE AND EXCISE TAX DIVISION 

SUBCHAPTER 4B - LICENSE TAXES 

SECTION .0100 - GENERAL ADMINISTRATION 

.0102 TRANSFER FEE 

Th e fiv e do l lar (S5.00) transf e r f ee cannot b e prorat e d. 

Authorit}- a.S. 105-33: 105-262. 

.0104 REFUNDS 

Pr i vilei; e lic e ns e s to b e r e fund e d for ov e rpayment of tax shall 
be r e turn e d with th e r e fund r e qu e st if in the poss e ssion of th e 
ta\pa\ e r. 

Authority- a.S. 105-33: 105-262: 105-266: 105-266.1. 

.0105 CHURCHES OR CHARITABLE 
ORGANIZATIONS 

No church or charitable organization is e x e mpt from paym e nt 
of pr i vil e ge lic e ns e tax wh e n e ngaging in an oth e rwi se taxable 
activity. 

Authorities. 105-33: 105-262. 

.0106 CEDED AREAS 

Th e stat e ha s no power to collect privilege license taxes on 
bus i n e ss e s carri e d on entireU w ithin an ar e a c e d e d by th e Stat e 
of North Carolina to th e federal governm e nt. 

Authority- G.S. 105-33: 105-262. 

.0107 BLIND PERSONS 

Blind p e rsons who qualify und e r G.S. 105 219 are e xempt 
from th e paym e nt of pr i vil e ge licenses. The Stat e Commission 



for the Blind certifi e s to th e R e v e nue 



p e r s on s 



who quality ' with said commission for thi s e x e mption. Whi le vv e 
do not actualK i s su e an exempt lic e ns e , w e honor th e 
commi s sion's c e rtificat e to us and also th e c e rtificat e is s u e d by 
a qualified phvsic i an or optom e trist, as provid e d und e r 
Subs e ction (d) of G.S. 105 249. 



Authority- G.S. 105-33: 105-249: 105-262. 

SECTION .0300 - AMUSEMENTS NOT OTHERWISE 
TAXED 



.0301 



NOT PRORATED 



Lic e ns e s for amu se m e nts not otherwi se tax e d may not b e 
prorat e d and is s u e d for on e half y e ar. 

Authority G.S 105-3'. 1: 105-262. 



13:8 



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October 15, 1998 



691 



PROPOSED RULES 



(a) A go cart rac e for which an admis s ion is charg e d to the 
sp e ctators is subj e ct to th e lic e ns e and thr ee p e rc e nt gross ^ 
r e c e ipt s tax imposed und e r G.S. 105 37.1. * 

(b) If a person op e rat e s a go cart traciv wh e r e sp e ctator f ee s 



ar e not charg e d, but a f ee i s charg e d to individuals for th e us e of 
th e track for th e ir own entertainm e nt, th e f ee s ar e not subject to 
th e gros s r e c e ipts tax. 



.0302 COMPUTATION AND PAYMENT OF GROSS 
RECEIPTS TA.XES 

(a) Th e thr ee p e rcent gross rec e ipts tax is computed upon th e 
e ntire admi s sion pric e l es s the f e d e ral tax. if any. — Th e thr ee 
p e rc e nt is not to b e d e ducted in ord e r to arriv e at th e tax ba se . 

(b) Form B 205. R e port of Gross R e c ei pts Tax. is u se d to 
rei n i l t h e thr ee p e rc e nt gross r e c e ipt s tax on amus e m e nts. This 

r e port s hal l b e til e d within the t1rst 10 da>s of e ach month Aulhorin- <JS. 1(13-3' I: 105-262. 
covering gros s r e c e ipt s for the prec e ding month, unl e ss th e 
op e ration is of a t e mporan natur e , th e n t he tax is du e at th e clo se 
of operat i on. 

(a) Computation. -- The gross receipts taxes imposed b\ G.S. 
105-37.1 and 105-38 on amusements are computed on the 
admission price of the amusements, less am federal tax included 
in the admission price. Gross receipts taxes are not deducted 
from the admission price to detemiine the tax base. When an 
amusement does not charge an admission price but those 



.0310 FISHING PIERS 

If sp e ctators ar e charg e d admission to a fishing pi e r, liability 
will b e du e und e r G.S. 105 37. 1 for th e lic e ns e and thr ee perc e nt 
gross r e c e ipts tax on such sp e ctator admission f ee s. — Wh e r e 
admissio n charge d is for tlshing. no part of such charg e is 
subj e ct to liability und e r G.S. 105 37.1. If a charge is made for 
fishing and a s e parat e charg e mad e for t he sp e ctators, th e 
s p e ctator f ee onN shall b e subj e ct to tax und e r G.S. 105 37.1. 



admitted are asked to make a \oluntar\ contribution, the gross 
receipts taxes appK to the voluntary contributions received. 

(b) Payment. The gross receipts taxes imposed b\ G.S. 105- 
37.1 and 105-38 must be reported to the Secretary on Form B^ 
205. Taxes pa\ able b\ a continuing amusement are due b\ the 
10'*' day after the end of each month. Taxes payable by a 
temporary amusement are due yvhen the amusement closes. 



An admission charge to a fishing pier js subject to the gross 
receipts tax imposed under G.S. 105-37.1 if the charge is for 
being a spectator on the pier .An admission charge to a tlshing 
pier is not subject to the tax If the charge js for tlshing on the 
pier. If one charge is imposed for being a spectator and another 
is imposed for fishing, only the charge for being a spectator is 
subject to the tax. 



AiiihoriiyC.S^ 103-3' J: 105-3<S: 105-262. 

.0306 CIVIC ORGANIZATION AMUSEMENTS 

Ex e mption of th e gro s s r e c e ipts tax on The exemption in G.S. 
105-40 for the first one thousand dollars (SI, 000) of receipts 
derived from danc e s and oth e r amus e m e nts actually promot e d 
and manag e d by civic organizations and private and public 
se con da ry s choo ls — is applicable to e ach such danc e or 
amu se m e nt a s a se parat e e v e nt . by a civic organization from a 
dance or another amusement promoted and managed by the 
organization applies separately to each dance or other 
amusement. 

.Author in- G.S. 105-3'.!: 105-38: 105-40: 105-262. 

.0308 DRAGSTRIPS AND GO-CART RACES 

A drag strip operation or a go-cart race for which an 
admission is charged to the spectators is subject to l i ab i l i ty the 
gross receipts tax imposed under G.S. 1 05-37. 1 . Th e lic e ns e f ee 
und e r this S e ction is tr e at e d as an advanc e paym e nt upon th e 
thr ee p e rc e nt gros s r e c e ipt s tax du e on th e adm i s s ion charg e s. 
Form B 205. R e port of Gross R e c e ipts Tax. is due monthly, not 
late r t han th e t e nth of th e month. Wh e n If a person operates a 
drag strip is op e rat e d or a go-cart track w here spectator fees are 
not charged, but a fee is charged to-the indiv iduals for the use of 
the strip or track for their own entertainment, the fees are not 
subject to the gross receipts tax. 

.Author in G.S. 105-3'. 1: 105-262. 



.Authorit)- G.S. 105-3'. 1: 105-262. 

.0311 HORSE AND DOG SHOWS 

Conducting a hors e or dog show for which an admission f ee 
is charg e d i s s ubj e ct to th e priv il e g e lic e ns e and gross r e c e ipts 
tax und e r G.S. 105 37.1 unl e ss th e e v e nt qualifies for e x e mption 
und e r G.S. 105 10. An admission charge to a horse or dog show 
is subject to the gross receipts tax imposed under G.S. 1 05-37. 1 . 

.Authorit}- G.S. 105-3'. 1: 105-262. 

.0312 RATTLESNAKE MILKINGS 

A rattlesnake milking exhibition for which a fee is charged is 
subject to lic e ns e and the gross receipts tax imposed under G.S. 
105-37.1. 

.Authority- G.S. 105-3'. 1: 105-262. 

SECTION .0400 - AMUSEMENTS: CIRCUSES: 

MENAGERIES: WILD WEST: DOG 

AND PONY SHOW S: ETC. 

.0403 REPORT OF GROSS RECEIPTS TAX 

Form B 205. R e port of Gross R e c e ipts Tax. is us e d to r e mit 
the thr e e percent gross r e c e ipts tax on amus e m e nt s und e r G.S. 
105 38. This r e port shall b e fil e d within th e first 10 davs of e ach 
month cov e ring gross r e c e ipts for th e pr e c e ding month, unl e ss 
the op e ration is of a t e mporary natur e , then th e tax is du e at th e 
c l os e of op e ration. 



.0309 GO-CART RACES 



.Authority- G.S. 105-38: 105-262. 



692 



NORTH CAROLINA REGISTER 



October 15. 1998 



13:8 



PROPOSED RULES 



practic e of any prof e ssion, business or trad e for which a state 
.0405 EXPECTED CONTRIBUTION qualification lic e n se is r e quir e d. 

The lic e ns e and gross receipts tax l e vi e d und e r G.S. 105 38 is 
appl i cable to trav e ling shows and e xhibitions which, instead of Aitlhorin- G.S. 105-33: 105-104: 105-262. 
an admission charg e , r e qu e sts sp e ctators to make a voluntary 
contribution. 



.Auihohn- G.S. 105-38: 105-104: 105-262. 

SECTION .2900 - INSTALLMENT PAPER DEALER 

.2902 LIABILITY FOR DIRECT LOANS 

If a p e r s on A person who makes direct loans and who also 
bu\ s installment pap e r, h e paper is subject to privil e g e lic e n se s 
uttiier both G.S. 105-83 and G.S, 105-88. 

Authority G.S. 105-83: 105-88: 105-262. 

.2903 QUARTERLY REPORT 

Form B-203. installment Paper Dealer QuarterK Report, is 
used to remit the tax of t37^ .277 percent of the total face value 
of paper subject to liability under G.S. 105-83. 

Authorit}G.S. J05-83: 105-262. 

SECTION .4300 - MANNER OF OBTAINING 
LICENSES FROM SECRETARY OF REVENUE 

.4301 APPLICATION FOR PRIVILEGE LICENSE 

Fomi B 202. th e pr e addr es s e d applicat i on for privil e ge 
lic e ns e , is mail e d th e e ar l y part of Jun e to th e address of the 
pr e c e ding y e ar's lic e ns e . Form B 202A. th e nonpr e addr e ss e d 
application for privil e ge l i cense. ma> b e obtain e d e ith e r bv 
writing to North Carolina D e partm e nt of Revenu e . Busin e ss 
Lic e ns e and R e turns Unit. PO Box 25000. Ral e igh. NC 27640. 
or b\ contacting a branch offic e of th e D e partm e nt of R e v e nu e . 
Eith e r form may be used i n mak i ng an application for a privil e g e 
lic e ns e . Remittanc e of tax du e must accompany an\ application 
for lic e nse. 

Authority G.S. 105-104: 105-262. 

.4302 PRIVILEGE LICENSE 

A privil e g e lic e ns e i s i s su e d for each tvp e lic e ns e purchas e d. 
Such a lic e ns e i s e vid e nc e that the pr i vil e g e lic e ns e tax is paid 
for th e privil e g e of carry ing o n th e business as d e scrib e d on th e 
lic e ns e . — How e v e r, this lic e nse alone do e s not authoriz e th e 



SUBCHAPTER 4E - ALCOHOLIC 
BEVERAGES TAX 

SECTION .0100 - LICENSES 

.0102 APPLICATION FOR LICENSE 

Application — for Stat e alcoholic — b e v e rag e comm e rcial 
lic e ns e s und e r G.S. 105 113.7 4 . Stat e beer and win e r e tail 
lic e ns e s und e r G.S. 105 1 13.75. and Stat e railroad alcoholic 
b e v e rag e sal e s lic e ns e under G.S. 105 1 13.76 shall b o fil e d 
with th e North Carolina Departm e nt of R e v e nu e . Offic e 
Examination Division. Busin e ss Lic e ns e and R e turns Unit. 
Ral e igh. North Carolina, on or b e for e May 1 of e ach y e ar 
with r e mittanc e of lic e n se tax applicabl e . In th e cas e of n e w- 
op e ration s b e ginning aft e r May 1. l i c e ns e s shall b e purchased 
b e for e sal e s ar e mad e . 

Authority G.S. 105-113. ~0 through 105-113. 79: 105-262. 

.0103 PENALTY 

P e nalty accru e s at th e rat e of fiv e perc e nt for each and every 
30 dav'S or fraction th e r e of (not to e .xc ee d 50 p e rc e nt) that th e 
lic e ns e tax r e mains unpaid from the dat e du e and payabl e . 
Application for r e n e wal of l ic e ns e should b e fil e d on or 
b e fore May 1 in jrd e r to avoid p e nalty. 

Authority G.S. 105-113.89: 105-262. 

SECTION .0200 - MONTHLY REPORTS: PAYMENT 
OF TAX 

.0201 FILING OF MONTHLY REPORTS 

Monthly reports, as follows, provided bv the Secretary of 
Revenue. shaH must be filed v\'ith the North Carolina Department 
of Revenue, lic e ns e and e xcis e tax division. Office Examination 
Division. Business License and Returns Unit. Raleigh, North 
Carolina, on or before the 15th da\ of each month covering 
transactions in alcoholic beverages for the preceding month b\ 
those licens ees taxpavers required to file, together with 
remittance of tax where applicable: 



Report Form To Be Filed B> 

( 1 ) B-C-7 1 Resident beer wholesaler and importer. 

(2) B-C-7 15 Beer manufacturer and nonresident wholesaler, 

(3) B-C-76] Dealers on trains (beer sales). 

(4) B-C-775 A. B.C. Boards. 

(5) B-C-776 Dealers on trains (spirituous liquor sales), 

(6) B-C-780 Dealers on trains (unfortified wine sales). 

(7) B-C-783 Resident unfortified w ine wholesaler and importer, 

(8) B-C-784 Resident fortified w ine wholesaler and importer. 



With Tax 
X 

X 
X 
X 
X 
X 
X 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



693 



PROPOSED RULES 



(9) B-C-787 Unfortified wine manufacturer and nonresident wholesaler, 

( 10) B-C-788 Fortitled wine manufacturer and nonresident wholesaler. 

(11) B-C-796 Nonresident shippers of bulk \\ ine to authorized resident bottlers. 



Authoritv G.S. 105-113.76; 105-113.83: 105-113.84: 105-262. 



.0202 EXAMINER'S REPORT 

Month l y e xc i s e tax r e ports ar e e xamin e d. Th e B e v e rag e Tax 
Examin e r's R e port. Fonn B C 71 1. is mail e d th e taxpay e r to 
i ndicat e errors and th e e ff e ct th e e rrors hav e on th e tax liabilit\. 
A dd iti ona l tax liabil i lx is subj e ct to p e nalty according to G.S. 
1 05 23 6 — attd — inte r es t — at — the — rate authoriz e d — und e r G.S. 
105 2 1 1.1( 1 ) p e r month or fraction of a month. 

AiahoniyG.S. 105-113.89: 105-262. 

.0203 SEPARATE REPORTS FOR WINES 

Separat e r e port s shall b e fil e d h\ th e r e s i d e nt whol e sal e r or 
i mport e r sinc e both th e tax rat e s and th e portion of th e tax 
distribut e d to local gox e rnment s diff e r 

Authority (J. S. 1 05- 1 1 3. SO through 105-113.83: 105-262. 

SECTION .0300 - SPOILAGE: BREAKAGE AND 
DESTRUCTION 



228.30. The address for mailing the report is: North Carolina 
Department of Revenue. Business License and Returns Unit. 
Conveyance Tax Section. PQ Box 25000. Raliegh. NC 27640- 
0001. 

Aurhorit^■ G.S. 105-228.30: 105-262. 



Notice is hereby given in accordance with G.S. 150B-21.2 
thai the Department ofRe^•emle intends to repeal rule cited 
us r NCAC 6B .0105. 

Editor's Note: G.S. I50B-Iidl(4) exempts the Department of 
Revenue from Part 2 Article 2 A of Chapter 150 with respect to 
the notice atid hearing recpiirements. The Department will 
howe\-er publish the text of proposed rules in the North Carolina 
Register prior to the scheduled time of review' by the Rules 
RevicM' Commission. 



.0302 SPOILAGE OF TAXPAID BEER OR WINE 

Spoi l ag e or br e akag e of an\ "taxpaid" b ee r or uin e er 
Spoilage, breakage, or other losses of an\ taxpaid beer or wine 
in an\ oth e r mann e r cannot be claimed as a deduction from the 
excise tax due. 

Authority G.S. 105-113.81: 105-262. 

SECTION .0700 - DISTRIBUTION OF MALT AND 
WINE EXCISE TAX TO LOCAL GOVERNMENTS 

.0703 QUESTIONNAIRES 

Annual questionnaires are mailed to each county (Form 
B-C-708) and each municipality (Form B-C-797) in order to 
obtain information necessary to determine their distributable 
share of malt. beer, unfortified vs ine. and fortified w ine excise 
taxes. 

Authority- G.S 105-113.82: 105-262. 

SUBCHAPTER 4F - EXCISE STAMP TAX ON 
CONVEYANCES 



.0005 CONVEYANCE TAX (EXCISE TAX ON 
DEEDS) REPORT 

The county finance officer shaH must file Fomi 



R- 



[Conveyance Tax (Excise Tax on Deeds) Report] with the 
Department on or before the 20th dav of e ach month with 
r e mittanc e co\ e ring on e half of th e n e t proc ee d s r e c e iv e d from 
th e conv o vanc e tax for th e pr e c e ding month, after the end of 
each calendar quarter and remit the tax due under G.S. 105- 



Proposed Effective Date: April I. 1999 

Instructions on How to Demand a Public Hearing: (must be 
requested in writing within 15 days of notice): A person may 
request a public hearing by sending a written request for a 
hearing to Mr Sam McEwen. Personal Tax Division. PO Box 
8'1. Raleigh. NC 2'602. by November 16. 1998. Notice of any 
public hearing scheduled on this proposed repeal will be 
published in the register 

Reason for Proposed Action: The Department is revising its 
forms so they can be processed on »tnr equipment, and this rule 
is not needed. 

Comment Procedures: li ritten comments may be submitted to 
.Mr Sam McEwen at North Carolina Department of Revenue. 
Personal Tax Division. PO Box 8' 1 . Raleigh. \C 2 '602. 
Comments received will be taken into consideration in adopting 
the permanent rule. If you have questions, you may call Mr 
McEwen at 919--33-3565. 

CHAPTER 6 - INDIVIDUAL INCOME TAX DIVISION 

SUBCHAPTER 6B - INDIVIDUAL INCOME TAX 

SECTION .0100 - FILING INDIVIDUAL INCOME TAX 
RETURNS 

.0105 REPRODUCED COPIES 

Th e d e partm e nt will acc e pt reproduced copi es of th e North 
Carolina i ndividual income tax. fiducian.. and partn e rship 



694 



NORTH CAROLINA REGISTER 



October 15, 1998 



13:8 



PROPOSED RULES 



returns — provid e d — the — r e productions — meet — the — tbi lowing 
r e quirements: 

f+^ Th e color must b e whit e or th e co l or of tii e 



departm e nt' s forms. 
(34 The pap e r w e ight must bo e qual to or b e tt e r than th e 

d e partm e nt's forms. 
(^ Th e fomi ma\ b e r e produc e d on on e s id e or both sid e s 

of th e pap e r, but th e pag es s ha l l b e stapl e d tog e th e r at 

the top. 
f+) Th e taxpay e r must sign the r e produced form. — A 

r e product i on of th e s ignatur e is not acc e ptabl e . 
{%r) The i nfomiation mu s t be l e gibl e and must b e of a t\p e 

that will not fad e for a p e riod of at l e a s t 1 \ e ars. Th e 

d e partm e nt — r ese r\ 'e s — the — r+ght — te — r e ject — am- 

r e production s w it h poor l egibility-. 

AulhoriivG.S. 1()5'I55: 105-251: 105-252: 105-262. 



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Notice is hereby given in accordunee with G.S. 150B-2 1.2 
ihat the Department of Revenue intends to repeal rules 
cited as 1 ' NC.4C 7B . 0124 - . 0125. 

Editor's Note: G.S. 150B-l(dl(4l exempts the Department of 
Revenue from Part 2 .Article 2.4 of Chapter 150 with respect to 
the notice and hearing recpiirements. The Department will 
however publish the text of proposed rules in the North Carolina 
Register prior to the scheduled time oj review by the Rules 
Review Commission. 

Proposed Effective Date: .4pril 1. 1999 

Instructions on How to Demand a Public Hearing imust be 
requested in writing within 15 days of notice): .4 person may 
request a public hearing by sending a written request for a 
hearing to Mr Timothy Holmes. Sales and Use Tax Division. 
PO Box 871, Raleigh. NC 27602. by November 16. 1998. 
Notice of any public hearing scheduled on this proposed repeal 
will be published in the Register 



SUBCHAPTER 7B - STATE SALES AND USE TAX 
SECTION .0100 - GENERAL PROVISIONS 

.0124 ERRONEOUS INFORMATION 

Th e stat e is not s topp e d to coll e ct the r e tail sales or us e tax 
l e vi e d by G.S. — 1 05 161.1 — b\ r e ason of an ag e nt of the 
D e partm e nt of R e v e nu e e rron e ou s ly advising th e m e rchant that 
c e rtain s al e s are not subj e ct to th e tax. 

.4 lit hor it}- G.S. 105-164.4: 105-164.6: 105-262. 

.0125 FLEA MARKETS 

<*) Ev e n person who sel l s tangibl e p e rsonal prop e rty at a fl e a 
mark e t, oth e r than hi s own hous e hold p e rsonal prop e rty, is 
r e quir e d to obtain a M e rchants C e rtificate of R e gistration 
Lic e ns e to e ngag e in and conduct such busin e ss. When making 
sal e s at th e fl e a mark e t such p e rson shall conspicuously disp l ay 
th e lic e n se or shall display a r e c e ipt from the D e partm e nt of 
R e \ e nu e showing that h e has appli e d for th e lic e ns e in cas e s 
wh e r e h e has not \ e t r e c e iv e d th e l i c e ns e . Every person who 
s e lls onK his own hous e hold p e rsonal prop e rty at a fl e a mark e t 
mu s t c e rt i fy in writing to th e person from whom h e l e as es or 
r e nts spac e that h e ysill sell only hi s oyvn hous e hold p e rsonal 
prop e rty and wh e n selling tangible p e rsonal propoity at th e fl e a 
mark e t must conspicuously display a copy of th e yvritt e n 
statem e nt. 

fb4 A p e rson yvho leas e s or r e nt s spac e to oth e rs at a fl e a 
mark e t shall k e ep r e cord s of r e tail e rs to yvhom h e ha s l e as e d or 
r e nt e d spac e at th e fl e a mark e t. Such r e cords shall includ e : 
f4-) th e dat e . 

(2) th e nam e and addr e s s of th e l es s ee 
(^ th e sal es and u se tax r e gi s tration numb e r of the l ess e e 
or th e r e c e ipt numb e r and th e name of th e R e v e nu e 
Offic e r issuing th e r e ceipt in cases yvhere the less ee 
has applied for but has not y e t r e c e iv e d the Merchants 
Certificat e of R e gistration Lic e n s e, and 
(4-) a copy of th e c e rtifi e d stat e m e nt of v e ndor s yvho s e ll 
on l y th e ir own hous e hold p e r s onal prop e rty y\h e r e v e r 
applicabl e . 



Reason for Proposed Action: 17 i\CAC 7B .0124 - This rule 
repeats the holding in the court case of Henderson v_ Gill, and 
is therefore unnecessary. 

17 NCAC 7B .0125 - This rule repeats G.S 105-164.4 and is 
therefore unnecessaiy. 

Comment Procedures: Written comments may be submitted to 
Mr Tim Holmes at North Carolina Department of Revenue. 
Sales and Use Tax Division. PO Box 8^1. Raleigh. NC 2~602. 
Coimnents received will be taken into consideration in adopting 
the permanent rule. If you ha\-e questions, you may call Mr 
Holmes at 919-''33-21 51. 

CHAPTER 7 - SALES AND USE TAX 



.4uihorinG.S 105-164.3(1): 105-164.4: 105-164.6: 105-262. 



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Notice is hereby given in accordance with G.S. 150B-21.2 
thai the Department of Revenue intends to repeal rule cited 
as rNC.4C9K.0601. 

Editor's Note: G.S. 150B-l(dl(4) exempts the Department of 
Revenue from Part 2 .4rticle 2.4 of Chapter 150 with respect to 
the notice and hearing requirements. The Department will 
however publish the text of proposed rules in the North Carolina 
Register prior to the scheduled time of review by the Rules 
Review Commission. 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



695 



PROPOSED RULES 



Proposed Effective Date: April I. 1W9 

Instructions on How to Demand a Public Hearing (must be 
requested in wriiing within 15 days of nuticei: A person men- 
request a public hearinii by sending a written request for a 
hearing to Ms. Jan Slussen Motor Fuel Tax Division, at PO Box 
8"!. Raleigh. .\C 2''6U2. by \orember 16. 1998. Soticeofany 
public hearing scheduled on this proposed repeal will be 
published in the Register. 

Reason for Proposed Action: The rule repeats G.S. 105- 
449.9-1 and IS there/ore u)inecessary. 

Comment Procedures: Written comments may be submitted to 
.\ls. Jan Slusser at Sorth Carolina Department of Revenue. 
Motor Fuel Tax Division. PO Box 8'1. Raleigh. \C 2'602. 
Comments received will be taken into consideration in adopting 
the permanent rule. If you have questions, you may call Ms. 
Slusser at 9 19-'33-4629. 

CHAPTER 9 - MOTOR FUELS TAX DIMSION 

SUBCHAPTER 9K - GASOLINE, DIESEL AND 
BLENDS 



November 16. 1998 at the SC State Board of CPA Examiners. 
1101 Oberlin Road Suite 104. Raleigh. \C 2'605. 

Reason for Proposed Action: To amend and adopt language 
resulting from the amended Lniform .Accountancy Act. which is 
a document that the Board uses as guidance to reflect current 
protection of the public and uniform regulation of its licensees. 
To amend and repeal rules relevant to reciprocal certification, 
firm registration and ownership, professional ethics and 
conduct, and definitions, as needed. 

Comment Procedures: Any person interested in these Rules 
may submit comments by mailing the comments to Robert S. 
Brooks. Executive Director .\C State Board of C PA examiners. 
POBox 1282'. Raleigh. SC 2' 605. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of state or local government funds. These Rules do not 
have a substantial economic impact of at least five million 
dollars I S 5. 000. 000) in a 12 -month period. 

SUBCHAPTER 8A - DEPARTMENTAL RULES 

SECTION .0300 - DEFLNITIONS 



SECTION .0600 - ENFORCEMENT AND 
ADMINISTRATION 

.0601 RECORDS OF EXEMPT SALES 

To e nabl e th e D e partm e nt of R e \ e nu e to id e ntify th e sal e s 
mad e to e x e mpt purchas e rs of motor fu e ls, a lic e n se d 
distributor shall pro\id e such information on a quart c rl) basis. 
A lic e n se d di s tributor ma\ us e its Quart e rK R e conciling 
R e port to pro\ id e th e r e quir e d information. 

Authorlt^■G.S 105-251: 105-252: 105-262: 1 05-44961 (ci. 



TITLE 21 - OCCUPATIONAL LICENSING BOARDS 

CHAPTER 8 - BOARD OF CERTIFIED PUBLIC 
ACCOUNTANT EXAMINERS 

Notice is hereby given in accordance with G.S. 150B-21.2 
that the SC State Board of CPA Examiners intends to 
amend rules cited as 21 SC4C 8A .0301. .0308. .0310. .0315: 
8F.010~. .0504: 8H .0001. .0002: 81.0004: 8J .000' - .0008. 
.0010 - .0011: 8K .0104 - .0105: 8M .0102 - .0104. .0201 - 
.0202. .0204. .0206 - .020~. .0301 - .0306. .0401 - .0403: 8S 
.0202. .0208. .0302 -.0303. .0306 -.030': and repeal rule cited 
as 21 SCAC 8J .0002. Sotice of Rule-making Proceedings Mas 
published in the Register on August 3. 1998. 

Proposed Effective Date: April 1. 1999 

A Public Hearing will be conducted at 10:00 a.m. on 



.0301 DEFINITIONS 

(a| The definitions set out in G.S. 93-l(a) shall appl> when 
those defined terms are used in 2 1 NCAC 8. 

(b) In addition to the definitions set out in GS 93- Ua). the 
following definitions and other definitions in this Section apph 
when these terms are used in 2 1 NCAC 8: 

( 1 ) "Acti\ e." w hen used to refer to the status of a person, 
describes a person who possesses a North Carolina 
certificate of qualification and who has not othen\ise 
been granted "Retired." "Inacti\e." or "Conditional" 
status; 

(2) ".Agreed upon procedure" means a client has engaged 
a CRA to issue a report of findings based on specific 
procedures performed on specific subject matter of 
specified elements, accounts, or accounting 
information that is part of but significantK less than a 
financial statement: 

(3) "AICPA" means the .American Institute of Certified 
Public .Accountants: 

(4) "Applicant" means a person who has applied to take 
the CRA examination; 

(5) ".Attest ser\ ice" means: 

(A) an_\ audit. 

(B) an\ review of a financial statement. 

(C) an> compilation of a financial statement when 
the CPA expects, or reasonabK might expect, 
that a third part} will use the compilation and 
the CRA does not disclose a lack of 
independence, and 

(D) an\ examination of prospective financial 
information; information, and 

(E) an\ agreed upon procedure. 



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(6) 



(7) 
(8) 
(9) 

(10) 



"Audit" means an examination of tlnanciai statements 
of a person b> a CPA. conducted in accordance with 
generally accepted auditing standards, to determine 
whether, in the CPA's opinion, the statements 
conform with generall> accepted accounting 
principles or, if applicable, with another 
comprehensive basis of accounting; 
"Board" means the North Carolina State Board of 
Certified Public Accountant Examiners; 
"Calendar \ear" means the 12 months beginning 
Januar\ 1 and ending December 3 1 ; 
"Candidate" means a person whose application to take 
the CPA examination has been accepted and who ma\ 
sit for the CPA examination; 

"Client" means ew? a person who oralK or in writing 
agrees with a p e r s on or Firm holding out pursuant to 
2 1 NCAC A .0308 to r e c e iv e an\ s e rvic e s includ e d in 
24 — NCAC — A — .0307; licensee to receive an\ 



professional services; 

(11) "Commission" means compensation, except a referral 
fee. for recommending or referring an> product or 
service to be supplied by another person; 

(12) "Compilation of a financial statement" means 
presenting in the form of a financial statement 
information that is the representation of an> other 
person w ithout the CPA's undertaking to express any 
assurance on the statement; 

(13) "Conditional." when used to refer to the status of a 
person, describes a person who holds a North 
Carolina certificate of qualification under certain 
conditions as imposed b> the Board, such as 
additional requirements for failure to complete the 
required CP hours in a calendar >ear; 

(14) "Contingent fee" means a fee established for the 
performance of an\ service pursuant to an 
arrangement in which no fee will be charged unless a 
specified finding or result is attained, or in which the 
amount of the fee is otherwise dependent upon the 
finding or result of such service; 

(15) "CPA" means certified public accountant; 

(16) "CPA" firm" means a sole proprietorship, a 
partnership, a professional corporation, a professional 
limited liability companv. or a registered limited 
liabilitN partnership which uses "certified public 
accountant(s)" or "CPA(s)" in or with its name or 
offers to or renders an\ attest services in the public 
practice of accountancv; 

(4-64 (17) "CP" means continuing professional education; 

fl-74 ( 18) "Disciplinar\ action" means revocation or suspension 
of. or refusal to grant, membership, or the imposition 
of a reprimand, probation, constructive comment, or 
any other penalty or condition; 

(4-8) "Disc l osur e " means a writt e n stat e m e nt of th e s e rvic e 

to b e r e nd e r e d with the conting e nt f ee to b e charg e d 
and which is dat e d and sign e d b> th e cli e nt; 
(19) "Examination of prospective financial information" 
means an evaluation b\ a CPA of; 



(A) a forecast or projection, 

(B) the support underlying the assumptions in the 
forecast or projection. 

(C) whether the presentation of the forecast or 
projection is in conformity with AICPA 
presentation guidelines, and 

(D) whether the assumptions in the forecast or 
projection provide a reasonable basis for the 
forecast or projection; 

(20) "FASB" means the Financial Accounting Standards 

Board; 
(244 "Firm" m e an s an individual propri e tor, a partn e rship, 
a prof e ssional corporation, a prof e ssional limit e d 
liabil i tv company, or a r e gist e red limited liability 
partner s hip; 

(J24 (2I) "Forecast" means prospective financial statements that 
present, to the best of the responsible party's 
knowledge and belief, an entit\'s expected financial 
position, results of operations, and changes in 
financial position or cash flow s that are based on the 
responsible party's assumptions reflecting conditions 
it expects to exist and the course of action it expects 
to take; 

fjj4 (22) "GAS" means the Governmental Accounting 
Standards Board; 

(J4-) (23) "Inactive," when used to refer to the status of a 
person, describes one who has requested inactive 
status and been approved by the Board and who does 
not use the title "certified public accountant" nor does 
he or she allow anyone to refer to him or her as a 
"certified public accountant," and neither he or she 
nor anyone else refers to him or her in any 
representation as described in 21 NCAC A .0308(b); 

(^^ (24) "IRS" means the Internal Revenue Service; 

(25) "Jurisdiction" means an\ state or territop. of the 
United States or the District of Columbia; 

(26) "License year" means the 12 months beginning JuK 1 
and ending June 30; 

(27) "Member of a CPA firm" means any CPA who has an 
equity ownership interest in a CPA firm including 
own e rs, partn e rs and shar e hold e rs; firm; 

(28) "NASA" means the National Association of State 
Boards of Accountancv; 

(29) "NCACPA" means the North Carolina Association of 
Certified Public Accountants; 

(30) "North Carolina office" means an> office physically 
located in North Carolina; 

(31) "Participating CPA firm" means a CPA firm 
participating in the SQR program. It does not include 
CPA finns exempt b\ reason of 21 NCAC 8M 
.0102(a) or deemed in compliance pursuant to 
21 NCAC8IV1 .0104; 

(32) "Person" means any natural person, corporation, 
partnership, professional limited liability company, 
registered limited liabilits partnership, unincorporated 
association, or other entity; 

(33) "Professional" means arising out of or related to the 



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697 



PROPOSED RULES 



particular knou ledge or skills associated with CPAs: 

<4») (34) "Projection" means prospective financial statements 
that present, to the best of the responsible party's 
knowledge and belief. gi\en one or more h\pothetical 
assumptions, an entity's expected financial position, 
results of operations, and changes in financial position 
or cash tlous that are based on the responsible part\ 's 
assumptions reflecting conditions it expects would 
exist and the course of action it expects would be 
taken gi\en such hypothetical assumptions; 

f4-l-> ( 3 5 ) "Referral fee" means compensation for recommending 
or referring an_\ ser\ ice of a CPA to an_\ person; 

<4» H36) "Retired." when used to refer to the status of a person, 
describes one possessing a North Carolina cenificate 
of qualification who \erifies to the Board that the 
applicant does not receive or intend to receive in the 
future anv earned compensation for current personal 
services in anv job whatsoever and will not return to 
active status. However, retired status does not 
preclude volunteer serv ices for which the retired CPA 
receiv es no direct nor indirect compensation so long 
as the retired CPA does not sign anv documents, 
related to such serv ices, as a CPA; 

<46 4(37) "Revenue Department" means the North Carolina 
Department of Revenue; 

<47-> (38) "Review " means to perform an inquirv and analvtical 
procedures that permit a CPA to determine v\hether 
there is a reasonable basis for expressing limited 
assurance that there are no material modifications that 
should be made to financial statements in order for 
them to be in conformitv with generallv accepted 
accounting principles or. if applicable, with another 
comprehensive basis of accounting: 
"SQR Advisor} Committee" means the State Qualit} 
Rev lew Adv isop. Committee to the Board; 
40) "SQR Program" means the State Qualitv Review 
Program of the North Carolina State Board of 
Certified Public .Accountant Examiners; 
"SQR Review team" means that team of CPAs which 
reviews a CPA firm pursuant to the requirements of 
Subchapter 8M. A review team mav be comprised of 
one or more members; 

"SQR Review team captain" means that member of a 
rev lew team v\ ho is responsible for the rev iev\ and 
supervises the other members of the team; 
"SQR Reviev\er" means a member of a review team 
including the review team captain; 
"Suspension" means a revocation for a specified 
period of time. A CPA mav be reinstated after a 
specific period of time if the C?.\ has met all 
conditions imposed bv the Board at the time of 
suspension: and 

f4-4 4(45) "Trade name" means a name used to designate a 
business enterprise. 

AuthurinG.S. 93-1: 93-1 2(8c). 



»-m(41) 

(444(42) 

f434(43) 
f4»>(44) 



.0308 HOLDING OUT TO THE PL BLIC 

(a) The phrase "holds himself out to the public as a certified 
public accountant." as used in defining "public practice of 
accountancy" in G.S. 93- 1(a)(5) and in these Rules, means any 
representation that a person holds a certificate of qualification, 
if that representation is made in connection with an offer to 
perform or the performance of accountancv serv ices for the 
public, regardless of whether that representation is made hv the 
person, someone associated w ith that person, or someone serv ing 
as that person's agent. Anv such representation is presumed to 
invite the public to relv upon the professional skills implied bv 
the certificate in connection w ith the professional serv ices 
offered to be performed or performed b> the person. 

(b) For purposes of this Rule, a representation shall be 
deemed to include anv oral or w ritten communication indicating 
that the person holds a certificate, including w ithout limitation 
the use of titles or legends on letterheads, reports, business 
cards, brochures, resumes, office signs, telephone directories or 
anv other advertisements, news articles, publications, listings, 
tax return signatures, signatures on experience or character 
affidavits for exam or certificate applicants, displaved 
membership in CPA associations, displaved CP.4 licenses from 
this or anv other state, and displaved certificates or licenses from 
other organizations vshich have the designation "CPA" or 
"Certified Public Accountant" bv the licensee's name. 

fe-) Faculty members lic e n se d bv th e Board are not consid e r e d 
to b e in th e public practic e of accountancv wh e n th e > us e th e 
titl e "c e rtifi e d public accountant" onlv for id e ntification as 
faculty m e mbers in an e ducational institution, for purpos e s of 
functioning in th e capacirv as s uch facultv memb e rs. 

{4) .Authors licens e d bv th e Board ar e not consid e r e d to b e in 
the public practic e of accountancv when th e v us e th e title 
"c e rtifi e d public accountant" only for id e ntification as authors of 
books. — articl e s or oth e r publications, provid e d that such 
publications do not offer the p e rformanc e of s e rv ices or th e sal e 
of products (oth e r than books, articl e s or other publications) of 
anv kind. 

fe) Licensees arc not consider e d to be in th e public practic e 
of accountancv wh e n th e ir lic e nsur e is publish e d in licensee or 
socierv m e mb e rship directories, or is includ e d in th e sal e of 
mailing lab e ls, or wh e n licensure or membership status is 
confirm e d. 

«-f) L ' S e of th e titl e in th e form of a disclosur e , wh e n a licens ee 



is r e quir e d b> law to disclos e th e fact of c e rtification as a CPA. 
is not "holding out" for th e purpos e s of this Rule. 

Aiuhorin- GS 93-liai(5i: 93-12. 

.0310 DIRECT SLPER\ ISION DEFINED 

(-a-) " Direct supervision" "Sup e rvision" means: 

( 1 ) hav ing jurisdiction and oversight authority ov er the 
process of planning, coordinating, guiding, inspecting, 
controlling, and ev aluating on a continuing basis the 
activities and accomplishments of the emplovees 
under one's command: 

(2) having the power of direction and decision in 
implementing activ ities to meet the objectiv es of one's 



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13:8 



PROPOSED RULES 



» 



stewardship; aftd 

(3) having authority delegated by higher management to 
hire, transfer, suspend, recall, promote, assign, or 
discharge an employee under one's charge or to 
recommend such action through the proper 
administrative chain of command, command; 

(4) haxina authority to super\ise the emplo\ee in the 
usual line of authorit\ unrestricted by multiple 
positions of influence; and 

(5) having authorit\ to verifN the emploNee's experience 
in a notarized experience affidavit. 

fb) "Direct sup e rvision" m e ans that the person sup e rvis e d i s 



reporting to th e sup e rvisor and th e r e is a cl e arcut personal 
conn e ction b e tw ee n e mplo\ ee and sup e rvisor charact e riz e d by 
a dir e ct, first hand association unr e strict e d b\ an int e rv e ning 
position of influ e nc e . 

Authority G.S. 93-12(5). 

.0315 NEW CPA FIRM, ONGOING CPA FIRM 

(a) When the members of a CPA firm elect to divide the CPA 
firm such that two or more CPA fimis are created, one CPA t1rm 
ma\ be the ongoing CPA firm and the other CPA firms max be 
new CPA firms, or all may be new CPA firms. The ongoing 
CPA firm, if an>. is the CPA firm the members of which 
r e pr e s e nt ov\n more than 50 percent of the ovsnership of the 
predecessor CPA firm prior to the division. 

(b) When two or more CPA finns merge, the resulting CPA 
firm ma\ be an ongoing CPA finn (successor to one of the 
predecessor CPA firms) or it ma\ be a new CPA firm. The 
resulting CPA firm is an ongoing CPA tlrm if an\ percentage of 
ownership greater than 50 percent of one of the predecessor 
CPA firms end up owning a percentage of the resulting CPA 
firm greater than 50 percent. 

(c) For purposes of this Rule, "percentage of ownership" 
refers to the percentage of the CPA tlrm owned aggregateK b\ 
the group of CPA firm members in question. Percentage of 
ownership is detennined based upon the number of shares held 
b_\ the group if the CPA firm is a professional corporation or a 
professional limited liability companv. or. if the CPA firm is a 
partnership or registered limited liabilitv partnership, the 
percentage of capital owned b> the group. 

(d) A change in an entirs's form (for example, incorporation 
of what was a partnership) does not create a new CPA firm. A 
n e w firm is not cr e at e d b> th e addition of a m e mb e r(s) not 
acquiring a p e rc e ntag e of own e rship gr e at e r than 50 p e rc e nt. 
N ei th e r is a n e w tlrm cr e at e d b\ th e lo s s of a m e mb e r(s) by 
r e tir e m e nt or death, provid e d th e r e maining m e mbers hav e 
purchas e d or ar e purchas i ng th e r e tir e d or d e c e as e d m e mb e rs' 
own e rship, r e gardl e ss of whether th e r e tir e d or d e c e as e d 
member( s ) ov\n e d mor e than 50 p e rc e nt of th e firm. 

(e) A new CPA firm ]s not created by the addition of a 
member(s) not acquiring a percentage of ownership greater than 
50 percent. Neither js a new CPA firm created by the loss of a 
member(s) by retirement or death, provided the remaining 
members have purchased or are purchasing the retired or 



deceased members' ownership, regardless of whether the retired 
or deceased member(s) owned more than 50 percent of the CPA 
firm. 

Authority' a. S. 93-1: 93-12(8c). 

SUBCHAPTER 8F - REQUIREMENTS FOR 

CERTIFIED PUBLIC ACCOl'NTANT 

EXAMINATION AND CERTIFICATi APPLICANTS 

SECTION .0100 - GENERAL PROVISIONS 



next below in th e usual lin e of authority or is in a staff position .0107 



COMMUNICATION OF RESULTS OF 
CPA EXAMINATIONS 

(a) The Board shall communicate to candidates in writing the 
result achieved in each of their examinations. Num e rical grad e s 
Grades awarded to candidates shall not be released to third 
parties except b\ written consent of the candidate. 

(b) In no event shall any information concerning answers of 
candidates be given to anyone other than the candidate. 

(c) Examination grades shall be mailed on the uniform 
national release date agreed to w ith the NASA and the AICPA. 
However, candidates may receive their grades personalK at the 
offices of the Board on the release date by notifying the 
Executive Director in writing not later than five days prior to the 
release date. 

(d) Information prepared b\ the Board's staff about the results 
of the examination and intended for public infonnation shall be 
made available no earlier than the dav after the unifom- national 
release date. 

AuthorityG.S. 93-12(2): 93-12(3). 

SECTION .0500 - APPLICATIONS FOR 
CERTIFICATES 

.0504 CANDIDATES' ACCOUNTANCY LAW 
COURSE REQUIREMENT 

(a) Within one \ear prior to applying for certification, all 
candidates for certification must pass an open book examination 
on the North Carolina Accountancy Statutes and Rules, 
including the Rules of Professional Ethics and Conduct 
contained therein. 

(b) In lieu of taking the examination, a candidate may 
complete an eight-hour CP course on the subject of the 
examination within one year prior to appKing for the CPA 
certificate. Such course or examination must meet the 
requirements of 21 NCAC 8G .0404(a). This course may count 
toward the candidate's annual CP requirement. 

(c) A non-resident candidate for a reciprocal application must 
comply with Paragraph (a] or (bj of this Rule within 120 days of 
receiving his or her CPA certificate or the certificate shall expire 
and the individual shall reinstate the certificate pursuant to 21 
NCAC 8J .0006. 

.AuthohtyG.S. 93-1 2(a). 



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699 



PROPOSED RILES 



SUBCHAPTER 8H - RECIPROCITY 

.0001 RECIPROCAL CERTIFICATES 

(a) P e rson s who m ee t th e r e quir e m e nts ot'G.S. 03 12(6) may 
appl> to th e Board for a r e ciproca l c e r tifi ca te . A person from 
another jurisdiction who desires to otter or render professional 
services as a CPA to his or her employer or a client \r\ this state 
shall meet all the requirements imposed on an applicant under 
G.S. 93-12(5) or the requirements ofG.S. 93-12(6). 

(b) The fee for a reciprocal ceitificate shall be the maximum 
amount allowed b> statute. 

(c) .An applicant for a reciprocal certificate shall meet all of 
the current requirem e nt s impos e d on an applicant und e r G.S. 
Q3 12(5) or th e follouing r e quir e m e nt s, w hich th e B o ard 
consid e rs to b e subsluntial l > e quiva le nt to tho se the follouinu 
requirements: 

( 1 ) The applicant has the unr e strict e d privil e g e legal 
authorin to use the CPA title and to practice public 
accountancv in any stat e or t e rritorv of th e Unit e d 
Stal e s, or th e District of Columbia, a jurisdiction. 

(2) The applicant: applicant has received a score of at 
least 75 on each part ot' the Uniform CPA 
Examination. 

{A) within t e n v e ar s immediat e lv pr e c e ding th e 
filing date of th e app l ication, has had four 
v e ars of e xp e ri e nce in th e fi el d of accounting 
und e r th e dir e ct supervisio n o f a CP. - \ who 
h e ld a valid licens e during th e p e riod of 
sup e rvision in anv stat e or t e n"itor\ of th e 
Unit e d Stat e s or th e District o f Co l umbia: or 
(-B^ has t e n v e ars of exp e ri e nc e in th e fi e ld of 
accounting, or t e n \ e ars of e xp e ri e nc e t e aching 
accounting as d e fin e d and calculat e d in 21 
NCAC S F .0 109. or anv combination of such 
e xp e ri e nc e — e arn e d — within — (iw — ^2 — v e ars 
imm e diat e lv pr e c e ding th e filing dat e of th e 
application. 
(4^ Th e applicant r e c e iv e d a scor e of at l e a s t 75 on e ach 

part of th e Uniform CPA Examination . 
(-4-) During th e tv\o v e ars preceding th e applicant's filing 
dat e for a r e ciprocal c e rtificat e , th e appl i cant ha s 
complet e d 80 hours of CP in courses meeting the 
r e quir e m e nts of 21 NCAC 8G .0 4 01(a). How e v e r. 
applicants who r e c e iv e d th e ir initial CPA licens e 
within four vears from th e filing date of their 
application for a reciprocal c e rtificat e ar e e x e mpt 
from this CP r e quirement. 

(d) An applicant for chang e in s tatus, r e issuance, or 
r e instat e m e nt of a r e ciprocal c e rtificat e that was inactiv e , 
forf e it e d, or r e tir e d mur e than 10 v e ars b e for e th e dat e of 
r e application. shall complv vsith all curr e nt r e quir e m e nt s for a 
r e ciprocal certificate, applv ing for a reciprocal certificate under 
G.S. 93-12(6) must meet the follov\ing requirements v\hich the 
Board considers to be substantiailv equivalent to those of G.S. 
93-12(5): 

( 1) The applicant shall have 150 semester hours of 
college or university education including a bachelors 



or higher degree with a concentration ]n accounting 
and other courses that the Board may require from a 
college or university that is acceptable to the Board 
and one year of experience in the field of accounting 
verified by a certified public accountant who was the 
applicant's direct supervisor: or 

(2) The applicant: 

(A) within \Q vears immediately preceding the 
filing date ot' the application, has had four 
vears of experience in tfie field of accounting 
under the direct supervision of a CP.A \vho 
held a valid license durin g the period of direct 
supervision in any state or teiritorv of the 
United States or the District ot" Columbia; or 

(B) has 10 years of experience in the field of 
accounting, or 10 vears of experience teachin g 
accounting as detlned and calculated in 21 
NCAC 8F .0409. or any combination of such 
experience earned within the 12 vears 
immediately preceding the filing date of the 
application: and 

(3) During the two years preceding the applicant's filin g 
date for a reciprocal certificate, the applicant has 
completed 80 hours of CP in courses meeting the 
requirements of 21 NCAC 8G .0401(a). How ever, an 
applicant v\ho received his or her initial CPA license 
v\ithin four vears from the filing date of the 
application for a reciprocal certificate is exempt from 
this CP requirement. 

(e) An applicant for change in status, reissuance, or 
reinstatement of a reciprocal certificate that was inactive, 
forfeited, or retired more than 10 vears before the date of 
reapplication. must complv v\ith all current requirements for a 
reciprocal certificate. 

AiilhorinG.S. 93-12/6/: 93-I2(a). 

.0002 TEMPORARY PERMIT 

(a) The Board may grant temporary permits onlv to applicants 
for reciprocal certificates pending their qualification under 21 
NCAC 8H .0001. .0001 and application to the Board on forms 
prov ided bv the Board. 

fb4 An out of stal e CPA \Kho do e s not hav e a c e rtificat e from 
this Board but d e sir e s to us e th e CPA title within this stat e must 

f+-l apply to the Board for a temporary permit and 
reciprocal certificate on forms prov ided bv the Board; 

(2^ furnish th e Board with an affidavit sign e d bv an 
official of th e CPA lic e nsing board of a stat e in which 
th e CPA is ctin e nl l v — l ic e ns e d to practic e public 
accounting, show ing both th e c e rtificate numb e r and 
that th e applicant i s in good s tanding; and 

<4) furnish th e Board v\ith e vid e nc e of th e applicant's 

CPA e .xamination grad e s through an affidav it sign e d I 
bv an official of a CP.A lic e n s ing board which can 
v e rify th e grad e s; 
fe)(b} Upon approval of a temporary pemiit. the Board will 



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13:8 



PROPOSED RULES 



> 



issue the applicant a statement confmning that the CPA is in 
good standing in the state issuing the CPA's ceilificate and is 
entitled temporariK to use the CPA title and engage in the public 
practice of accountancy in North Carolina for a stated period. 
The stated period shall expire 120 da>s after issue or upon 
issuance of the individual's reciprocal certificate, whichever 
comes first. 

Authorin-G.S. 93-12(6): 93-1 2(a). 

SUBCHAPTER 81 - REVOCATION OF 

CERTIFICATES AND OTHER 

DISCIPLINARY ACTION 

.0004 MODIFICATION OF DISCIPLINE AND 
NEW CERTIFICATE 

(a) A person or CPA finn that has been disciplined b\ the 
Board may appK to the Board for modification of the discipline 
at any time after the effective date of the Board's decision 
imposing it: however, if any previous application has been made 
with respect to the same discipline, no additional application 
shall be considered before the lapse of one year following the 
Board's decision on that previous application. Provided, 
however, that an application to modify permanent revocation 
shall not be considered until after five years from the date of the 
original discipline, nor more often than three years after the 
Board's last decision on any prior application for modification. 

(b) The application for modification of discipline or for a new 
certificate shall be in writing, shall set out and. as appropriate, 
shall demonstrate good cause for the relief sought. The 
applicition for an individual shall be accompanied by at least 
three supporting recommendations, made under oath, from 
CAPS who have personal know ledge of the activities of the 
applicant since the discipline was imposed. The application for 
a CPA firm shall be accompanied by at least three supporting 
recommendations, made under oath, for each CPA partner. CPA 
member, or CPA shareholder from CAPS who have personal 
know ledge of the activities of the CPA partner. CPA member, or 
CPA shareholder since the discipline was imposed. 

(c) "Good cause" as used in Paragraph (b) of this Rule means 
that the applicant is completely rehabilitated v\ith respect to the 
conduct which was the basis of the discipline. Evidence 
demonstrating such rehabilitation shall include evidence: 

( 1 ) that such person has not engaged in an\ conduct 
during the discipline period which, if that person had 
been licensed or registered during such period, would 
have constituted the basis for discipline pursuant to 
G.S. 93-12(9); 

(2) that, with respect to an\ criminal conviction which 
constituted any part of the previous discipline, the 
person has completed the sentence imposed: and 

(3) that, with respect to a court order, restitution has been 
made to any aggrieved party. 

(d) In determining good cause, the Board may consider all the 
applicant's activities since the disciplinary penalty was imposed, 
the offense for which the applicant was disciplined, the 



applicant's activities during the time the applicant was in good 
standing with the Board, the applicant's rehabilitative efforts, 
restitution to damaged parties in the matter for which the penalty 
was imposed, and the applicant's general reputation for truth and 
professional probity. For the purpose of this Paragraph, 
"applicant" shall, in the case of a CPA firm, include CPA 
partners, CPA members, or CPA shareholders. 

(e) Any person who applies for a modification of discipline 
and for a new certificate after revocation shall, in addition to the 
other requirements of this Section, comply with all qualifications 
and requirements for initial certification which exist at the time 
of the application. 

(f) No application for a new certificate or for modification of 
discipline shall be considered while the applicant is serving a 
sentence for any criminal offense. Serving a sentence includes 
incarceration, probation (supervised or unsupervised), parole, or 
suspended sentence. an> of which are imposed as a result of 
having been convicted or plead to a criminal charge. 

(g) An application shall ordinarily be ruled upon by the Board 
on the basis of the recommendations and evidence submitted in 
support thereof However, the Board may make additional 
inquiries of any person or persons, or request additional 
evidence it deems appropriate. 

(h) As a condition for a new certificate or modification of 
discipline, the Board ma\ impose terms and conditions it 
considers suitable. 

Authority G.S. 55B-12: 93-2: 93-l2(a): 93-12(7b): 93-12(9). 

SUBCHAPTER 8J - RENEWALS AND 
REGISTRATIONS 



l e tters. 



.0002 SUPERVISION OF CPA OFFICES 

Ev e ry CPA office or tmn which us e s any words 
abbr e viations, s ymbols or oth e r means of identification to 
indicat e that th e offic e is e ngag e d in th e practic e of public 
accountancx shall b e activ e ly and locally s up e rvis e d by a CPA 
who se primary r e spon s ibility and a corr e sponding amount of 
tim e shall b e work p e rfonn e d in that offic e . No p e rson shall b e 
d e signat e d as th e sup e rvisor or manag e r of any such offic e 
unl es s h e or sh e is th e hold e r of a North Carolina CPA 
certificat e in good standing. 



Aiithorit}- G.S. 93-12(a)(5): 93-12(9). 

.0007 MAILING ADDRESSES OF CERTIFICATE 
HOLDERS AND CPA FIRMS 

All certificate holders and CPA firms shall notify the Board 
in writing within 30 days of an\ change in address or business 
location. 

.4lUhont^•G.S. 55B-12: 93-12(:'h)(5): 93-12(9). 

.0008 CPA FIRM REGISTRATION 

(a) All CPA flmis shall register w ith the Board w ithin 30 days 
after opening a North Carolina office or beginning a new CPA 
firm unless the\ are a professional corporation, professional 



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limited iiabilin compan\. or registered limited liabilit} 
partnership, in which case the\ shall register prior to formation 
pursuant to 2 1 NCAC 8K .0 1 04 and .030 1 . 

(b) In addition to the initial registration required b\ Paragraph 
(a) of this Rule, all CP.A firms shall register annual!) b\ .lanuan. 
31 \\ith the Board upon forms pro\ided b\ the Board. 

(c) The infomiation pros ided b\ the registration shall include: 



(1) 

C) 

(3) 

(4) 

(5) 
(6) 
(7) 
(8) 



Either an application for exemption from SQR- a 

request to be deemed in compliance with SQR or 

registration for SQR- pursuant to 2 1 NCAC 8M .0102 

an'd.0104; 

For all CP.A tlmis not exempt from the SQR program. 

v\ ith the registration immediateK following its re\ iew. 

the affida\it required b\ 21 NCAC 8M .0^1 02(d): 

For all North Carolina offices, an office registration 

form indicating the name of the office super\ isor. the 

location of the office and its telephone number: 

For all partnerships or registered limited liabilitx 

partnerships, a list of all resident and nonresident 

partners of the partnership: 

For all professional limited liabilit\ companies, the 

information set forth in 21 NCAC 8K .0104(d): 

For all incorporated CP.A firms, the information set 

forth in 21 NCAC 8K .0104(d); 

For all CP.A fimis. the appropriate registration fees as 

set forth in 21 NCAC 8J .0010: and 

For all new CP.A fimis. the percentage of ownership 

held indi\iduall\ b> each partn e r, shar e hold e r, or 

m e mb e r: owner: 



(A) 
(B) 



in the new CP.A finn: and 



at the \ ear-end in each CP.A firm in which that 
partn e r, m e mb e r, or shar e hold e r was a partner- 
m e mber, or shar e hold e r owner was an owTier 
during the preceding two \ears. 
(9) For all changes in ownership of a CP.A firm, the 
percentage of ownership held indi\iduall\ b\ each 
partn e r, shar e hold e r, or m e mb e r, owner. 
(d) .All infomiation pro\ided for registration with the Board 
shall pertain to events of and action taken during the >ear 
preceding the > ear of registration. The last da\ of the preceding 
calendar \ ear is the "\ ear-end". 

(e> With regard to Paragraph (c)(3) of this Rule, one 
representative of a CP.A fimi ma_\ file all documents with the 
Board on behalf of the CP.A firm's offices in North Carolina. 
However, responsibilitx for compliance with this Rule shall 
remain w ith each office super\ isor. 

(fl W ith regard to Paragraph (cH4l or (c)(5 1 of this Rule, one 
annual listing b\ a representative of the partnership, registered 
limited liability partnership, or professional limited liabilitx 
companv shall satisfx the requirement for all partn e rs or 
m e mb e rs owners of the CPA firm. How ev er. each partn e r or 
m e mb e r owner shall remain responsible for compliance w ith this 
Rule. The absence of a filing under Paragraph (c)(4) or (c)(5) of 
this Rule shall be construed to mean that no partnership, 
registered limited iiabilitx partnership, or professional limited 
liabilitv companv exists, 
(li) Notice that a CP.A fimi has dissolved or an\ chantze in the 



information required b\ Paragraph (c)(3) of this Rule shall be 
delivered to the Board's offiice within 30 davs after the change or 
dissolution occurs. ,A professional corporation or professional 
limited liabiliu companv w.hich js dissolving shall deliver the 
■Articles of Dissolution to the Board's office within 30 davs of 
filing with the Office of the Secretary of State. 

(h) Upon v\ ritten petition bv a CP.A fimi. the Board mav. in 
its discretion, grant the CP.A firm a conditional registration for 
a period of 60 davs or less, if the CPA firm shows that 
circumstances bevond its control prohibited it from registering 
v\ith the Board, completing a qualitv review or notit\ing the 
Board of change or dissolution pursuant to Paragraphs (a), (b). 
(c). and (g) of this Rule. The Board ma> grant a second 
extension under continued extenuating circumstances. 

(i) .A complete registration, as required b\ 21 NCAC 8.1 
.0008(b) and (c). shall be postmarked with proper postage not 
later than the last da> of Januan. unless that date falls on a 
v\eekend or federal holidav. in which case the registration shall 
be postmarked or received in the Board office on the ne.xt 
business dav. Onh a U.S. Postal Service cancellation shall be 
considered as the postmark. If a registration is sent to the Board 
office via a private deliver, service, the date the package is 
received bv the deliver}, service shall be considered as the 
postmark. 



Aiahorin- G.S. 55B-I(J: 55B-12: 
93-12tai: 93-I2l8ci. 



'C-1: 5'C- 



^'-84.2: 



.0010 REGISTR.ATION AND SQR FEES 

The annual registration fees shall be as follows: 

( 1 ) For participation vv ithin SQR or for a request to be 
deemed in compliance with SQR. sevent}-five dollars 
(S75.00) plus five dollars (S5.00) for each additional 
North Carolina office of the CP.A firm not excused 
from SQR bv 21 NCAC S.M .0204; 

(2) For all professional corporations or professional 
limited liabilirv companies. tv\ent\-five dollars 
(S25.00); and 

(3) For all non-incorporated CPA firms which have 
offices both within and outside the state of North 
Carolina. v\hether sole proprietorships, partnerships, 
or registered limited liabilirv partnerships, an amount 
equal to two thousand five hundred dollars 
(S2.500.00) or the number of own e rs CP.A members 
of the CP.A firm multiplied bv ten dollars (SIO.OO). 
vshichever is less. 



Authority G.S. 55B-11: 558-12: 
93-I2(-h): 93-!2(ai: 93-l2iHci. 



5 'C-1: 5'C-2: 59-84.2: 



.0011 COMPLIANCE \MTH CPA FIRM AND 
SQR REGISTR.ATION 

If a CP.A firm fails to compiv with anv part of 21 NCAC 8J 
.0008. 8J .0010 or 8M .0102. the Board may take disciplinan. 
action against the CP.A firm's members. Such discipline mav 
include: 

(I) a conditional license upon such conditions as the 



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Board may deem appropriate for non-compliance of 
less than 60 days; 

(2) a conditional license and one hundred dollar 
($100.00) civil penalty for non-compliance in excess 
of 60 days but not more than 1 20 days: 

(3) a suspension of each member's CPA certificate for a 
period of not less than 30 da\s for non-compliance in 
excess of 120 days. 

AuihohtyG.S. 55B-I2: 57C-1: 57C-2: 59-84.2; 93-1 2(8c): 93- 
12(91. 

SUBCHAPTER 8K - PROFESSIONAL 

CORPORATIONS AND PROFESSIONAL 

LIMITED LIABILITY COMPANIES 

SECTION .0100 - GENERAL PROVISIONS 

.0104 REGISTRATION AND RENEWAL 

(a) Domestic CPA professional corporations or professional 
limited liabilit\ companies must be formed and all CPA 
professional corporations or professional limited liability 
companies must be operated in accordance with the requirements 
set out in G.S. 55B and 57C. Before any CPA professional 
corporation or professional limited liabilit\ compan\ can offer 
to perform or perform any professional services in this state, it 
must register with the Board. 

(b) Initial registration. 

(1) Domestic CPA Corporation or Professional Limited 
Liability Company. In order to register initially \s ith 
this Board, the incorpoi ators of a domestic CPA 
corporation or professional limited liability company, 
prior to incorporation of the CPA tlrm. must: 

(A) prepare and tile with the Board the articles of 
incorporation along with any supporting 
documents and appropriate checks for fees 
payable to the Secretary of State; 

(B) complete and file with the Board the 
application for professional corporation or 
professional limited liability company 
registration form along with an\ supporting 
documents: and 

(C) pay to the Board an initial registration fee of 
fifty dollars ($50,00), 

(2) Foreign CPA Corporation or Foreign Limited 
Liability Company, To register initially with the 
Board, the officers of a foreign corporation or foreign 
limited liability compan\. prior to performing services 
or offering to perform services in North Carolina, 
must submit to the Board: 

(A) on an application for registration fonn 
provided by the Board, a list of its present 
shareholders or members and the state or 
territory issuing the CPA certificate, or the 
equivalent, of each shareholder or member and 
the number of each certificate or equivalent: 



and 
(B) the documents required by G,S, 55A-61. 55 A- 
62. and 57C-7, 

(c) In addition to its initial registration, every CPA 
corporation or professional limited liability company, whether 
domestic or foreign, must register annually pursuant to 21 
NCAC 8J ,0008. 

(d) The application for registration by a CPA corporation or 
professional limited liability company shall provide the 
follow ing information: 

( 1 ) the name and address of the professional corporation 
or professional limited liability company: 

(2) the address of each office operated or maintained by 
the corporation or professional limited liability 
company; 

(3) the names and addresses of all the officers, directors, 
shareholders, or members: and 

(4) the names and addresses of all the employees and 
managers of the corporation or professional limited 
liabilit\ compan\ licensed b\ the Board under the 
provisions of G.S. 93. 

.iuthohtyG.S. 55B-I1: 5'C-l; 57C-2:59-84.2: 93-8: 93-12(7h): 
93-1 2 (8cj. 

.0105 SUPPLEMENTAL REPORTS 

(a) The Board ma\ request in writing such supplemental 
reports as it deems appropriate from any professional 
corporations or professional limited liability companies 
registered v\ith the Board pursuant to G.S. 55B. 57C. and these 
Rules. The professional corporation or professional limited 
liability company shall file such reports with the Board's office 
within 30 days from the date it received the request. 

(b) In addition to the supplemental reports required by 21 
NCAC 8.1 .0008(g). professional corporations or professional 
limited liabilitv companies registered with the Board pursuant to 
G.S. 55B and 57C shall file a certified copy of all amendments 
to the articles of incorporation or articles of organization within 
30 days aft e r prior to the effective date of each amendment. 
They shall also file a copy of any amendment to the by-laws, 
certified to be a true copy by the Secretary or an assistant 
secretary of the corporation or professional limited liabilit) 
company, within 30 days aft e r prior to adoption of the 
amendment. 

.Authority G.S. 558-1!: 5''C-!: 57C-2: 93-12(3). 

SUBCHAPTER 8M - STATE QUALITY REVIEW 
PROGRAM 

SECTION .0100 - GENERAL SQR REQUIREMENTS 

.0102 REGISTRATION REQUIREMENTS 

(a) A CPA firm which has not performed any audits, reviews, 
compilations, or agreed upon procedures during the 12 months 
prior to the \ear-end of the registration required by 21 NCAC 8J 
.0008(a) and (b) shall be exempt from the SQR program for the 



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703 



PROPOSED RULES 



12 months follow ing the > ear-end but not from registering with 
the Board. 

(b) Unless exempt under Paragraph (a) of this Rule, each 
ongoing CPA firm shall complete an SQR within 24 months 
following the \ear-end of each registration unless it has 
completed an SQR w ithin 24 months prior to the \ear-end. 

(c) Unless exempt under Paragraph (a) of this Rule, a new 
CPA tlnn shall complete its initial SQR within 24 months of the 
date of its initial registration pursuant to 21 NCAC 8J .0008(a). 

(d) Ever} CPA firm not exempt from SQR by Paragraph (a) 
of this Rule, after completion of a qualit\ review, shall procure 
a statement signed b\ the re\ iew team captain, a statement 
signed by a member of the CPA firm being re\ iewed, or letter of 
acceptance from an approved review program, stating that the 
C?.\ firm has completed an SQR or one of the review programs 
listed or referred to in 2 1 NCAC 8IVI .0104. The CPA fnm shall 
submit the statement or documentation with the annual 
registration following the review as set forth in 21 NCAC 8J 
.0008(c)(2). 

(e) For purposes of this Rule, an SQR is complete when the 
review team has delivered its report required b\ 21 NCAC 8M 
.0306 to the reviewed CPA firm. Any quality review other than 
SQR is complete when the review team has delivered its final 
report to the reviewed CPA firm. If mailed, a report shall be 
deemed delivered when postmarked. 

AiithoriiyG.S. 93-I2('b): 9S-i:(Hc). 

.0103 PROHIBITION OF ABUSE 

Firms CPA firms shall not rearrange their structure or act in 
an\ other manner w ith the intent to avoid participation in SQR. 

AiiihoriryG.S. 93- 1 2 (8c). 

.0104 FIRIV1S DEEMED IN COMPLIANCE 

(a) Firms CPA fimis which have participated in one of the 
review programs set forth in either Paragraph (b) of this Rule or 
the list referred to in Paragraph (c) of this Rule, rather than SQR. 
within the applicable time period prescribed by 21 NCAC 8M 
.0102(b) and (c) are deemed to be in compliance with the SQR 
program. 

(b) The following quality review programs are found by the 
Board to be of the t\pe required bv the Board in its SQR 
program: 

(1) AlCPA Division for CPA Finns SEC Practice 
Section, and 

(2) AICPA Peer Review Program. 

(c) Other quality review programs may be of the type required 
b> the Board in its SQR program, which is equivalent to the 
guidelines of the AICPA Peer Review Program. A list of such 
programs w ill be maintained at the Board offices and mailed to 
any CPA firm upon request. 

(d) Pursuant to G.S. 93-12(8c), a CPA firm which 
contemplates undergoing a quality review program other than the 
SQR program or those listed or referred to in Paragraphs (b) and 
(c) of this Rule ma\ request a determination from the Board 
whether the qualirv rev iew program is of the t\pe required b\ the 



Board in the SQR program, which is equivalent to the guidelines 
of the AICPA Peer Review Program. The CPA firm shall 
supply all infonnation requested of it by the Board and. within 
two months of the month all infonnation requested has been 
received b\ the Board, the Board shall make its detennination 
and notify the CPA firm. 

Aulhorin- G.S. 93-I2(Mc)(e). 



SECTION .0200 



DUTIES OF THE REVIEWED 
FIRM 



.0201 



SELECTION OF ENGAGEMENTS TO BE 
REVIEWED 

(a) Each office of the reviewed CPA firm not excused under 
21 NCAC 8M .0204 shall select a set of engagements to be 
submitted for review as required b\ the programs listed in 21 
NCAC8M .0104(b)(1) and (2). 

(b) A set of engagements for review shall include the 
accountant's report and financial statements for one audit, one 
review, one compilation, and one agreed upon procedure, if 
these levels of service have been performed by the office within 
the 1 2 months preceding the \ ear-end. If one or more levels of 
service have not been performed, the office shall select reports 
of the next highest level of service for renorts required to be 
submitted. If of the levels of service, on. compilations have 
been performed by the office, the set of engagements shall 
include at least one compilation report on a complete set of ■ 
financial statements which includes disclosures and one 
compilation report on a financial statement where management 
has elected to omit substantialK all of the disclosures nonnally 
required bv generallv accepted accounting principles set forth in 
21 NCAC 8N .0209. if both types of compilations are 
performed. 

(c) The set of engagements, if possible, shall include clients 
operating in different industries. For example, submission of 
one governmental audit, one manufacturing review and one 
contractor compilation would satisfy this requirement. 

(d) If a CPA finn to be reviewed does a governmental audit, 
at least one shall be included in the set of engagements. 

(e) An office of the reviewed CPA firm not participating in 
the programs listed in 21 NCAC 8IV1 .0104(b)(1) and (2) shall 
select a set of engagements to be submitted for review as 
required b> the applicable AICPA Peer Review Program. 

AulhorityG.S. 93-1 2<Hc). 

.0202 NOTICE TO CLIENTS 

The participating CPA firm ma\ adv ise its clients that it w ill 
participate in a quality review required bv the Board and that the 
client's accounting or auditing work mav be part of the review 
process. 

Aiahi>nty G.S. 93-!2/8c). 

.0204 CERTAIN OFFICES EXCUSED 

The following offices of participating CPA firms are not 



704 



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PROPOSED RULES 



required to participate in the SQR program: 

(1) offices which are not North Carolina offices, and 
which have not performed an> audits, reviews. 
compilations, or agreed upon procedures for clients in 
North Carolina; and 

(2) North Carolina offices which have not performed any 
audits, reviews, compilations, or agreed upon 
procedures for the 12 months prior to the year-end set 
forth in 21 NCAC 8J .0008. 

AiithorinG.S. 93-1 2l8c). 

.0206 SELECTIONOF A REVIEW TEAM 

(a) A participating CPA fimi shall select the review team 
which will perform the CPA firm's SQR. 

(b) The participating CPA finn shall see that the re\ iew team 
is qualified under 2 1 NCAC 8M .030 1 and engaged to perform 
the review in accordance with the standards for the performance 
of SQR set forth in 21 NCAC 8M .0302-.0306. 

Aiilhorin- C.S. 93-12(8c). 

.0207 DUTY TO RESPOND TO QUESTIONS 

(a) The participating CPA t1rm shall respond promptlv to 
questions raised during the review process b\ any member of the 
review team, whether oral or written. 

(b) The participating CPA firm shall respond in writing to 
questions raised by the SQR report required b\ 21 NCAC 8IVI 
.0306 w ithin 30 days from the date the report is delivered to it. 
The letter of response shall be addressed to the SQR Committee 
and a cop\ sent to the review team captain. 

Aiithorin'G.S. 93-1 2( 8c). 



or referred to in 21 NCAC 8M .0104 within the last 
three years but which has not received an adverse 
report on its most recent quality review; 

(3) must be a manager (or the equivalent) within his/her 
CPA firm; and 

(4) must have da\-to-day involvement in auditing and 
accounting procedures which is sufficiently 
comprehensive to enable him/her to perfonn and 
oversee the SQR with professional expertise. 

Authority G.S. 93-12l8c). 

.0302 INDEPENDENCE FROM A REVIEWED 
CPA FIRM 

(a) A revievser shall be independent with respect to the 
reviewed CPA firm. 

(b) independence is impaired if a reviewer: 

( 1 ) performs an SQR of a CPA firm which performed the 
most recent quality review of the reviewer's CPA 
firm; 

(2) performs an SQR of a CPA finn an emplovee or 
member of which performed or participated in the 
performance of the most recent quality review of the 
reviewer's CPA finn; or 

(3) has an> direct or indirect financial interest in a 
reviewed CPA finn's client and reviews engagements 
performed for that client. 

(c) Paragraph (b) of this Rule does not include all instances 
where a reviewer's independence would be impaired. In 
considering whether independence is impaired, the reviewer 
shall consider the effect of family and other relationships and the 
possible appearance of loss of independence as a result of those 
relationships. 



SECTION .0300 



.0301 



REVIEW TEAM: QUALIFICATIONS 
AND DUTIES 



QUALIFICATIONS OF REVIEWERS AND 
TEAM CAPTAINS 

(a) A reviewer must be a CPA on active status licensed in an> 
state of the United States, be in good standing with the CPA 
boards b\ which (s)he is licensed to practice public accounting, 
possess current knowledge of the code of professional ethics and 
conduct, and possess current know ledge of the accounting and 
auditing standards applicable to the engagements to be reviewed 
b\ him/her. However. (s)he need not possess knowledge of the 
applicable accounting and auditing standards with regard to 
every engagement involved in the review, unless (s)he is the onl\ 
member of a review team. 

(b) A reviewer shall not have been disciplined for violation 
of 21 NCAC 8N .0202 or .0408 within the five vears preceding 
the date the review engagement is entered. 

(c) The review team captain: 

( 1 ) must have five years' experience or more as a CPA in 
the accounting and auditing function; 

(2) must be a member or employee of a CPA fimi which 
has completed an SQR or other quality review listed 



Author it}- G.S. 93-1 2 (8c). 

.0303 CONFLICT OF INTEREST 

(a) A reviewer shall not have a conflict of interest with 
respect to the reviewed CPA firm or the clients whose 
engagements are selected for review. 

(b) A reviewer shall avoid contacts with the reviewed CPA 
firm's clients or personnel that could be asserted to be evidence 
of a conflict of interest. 

Authority- G.S. 93-1 2(8c). 

.0304 PERFORMING THE REVIEW - 
REVIEWER'S DUTIES 

(a) The objective of the review shall be to determine that the 
financial statements and related accountant's report on the audit, 
review or compilation engagements submitted for review do not 
depart in a material respect from the requirements of 
professional standards set forth in 21 NCAC 8N .0209-.0211, 
.0304. and .0403-.0406. 

(b) The review team shall read the financial statements 
submitted b\ the participating CPA firm and the accountant's 
audit, review or compilation report thereon. 



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(c) The review team must determine whether each of the 
accountant's report and financial statements confonn u ith the 
applicable professional standards set forth in 21 NCAC 8N 
.0209-.02I I. .0304. and .0403-.0406. 

(d) Before issuing its SQR report pursuant to 21 NCAC 8M 
.0306, the review team ma\ raise questions with the participating 
CPA tlrm either orallv or in written form to resolve questions 
which come to their attention during a re\ iew. 

(e) The review team shall document the work performed 
using programs and checklists which prov ide a reasonable basis 
for their SQI^ report. 

(ft A revie\\ team shall not issue an SQR report, pursuant to 
21 NCAC 81V1 ,0306. unless it has complied with the applicable 
review standards and requirements. 

Aiilhorily U.S. 93-1 2(Sc). 

.0305 CONFIDENTIALITY 

Information concerning the participating CPA finn or its 
clients or personnel that is obtained as a consequence of the 
review is confidential and must not be disclosed to anvone not 
involved in the SQR process. 

Aiilhorily CJ.S. 9 3- 1 2 (8c >. 

.0306 REPORTING REQUIREMENTS 

(a) The review team shall deliver an SQR report and the 
statement required b\ 2 1 NCAC 8M .0 1 02(d) to the participating 
CPA finn v\ithin 60 days after all of the engagements v\hich are 
to be reviewed have been delivered to it. Beginning Januarv' I . 
19')6. the review team shall also deliver its SQR report to the 
SQR Advisorv Committee bv the same date. 

(b) The SQR report and a letter of comment, if an\. shall be 
written and issued on the letterhead of the team captain's CPA 
firm and shall either be unmodified, modified, or adverse. 

(c) It is suggested that a letter of comment be issued if the 
report is modified or adverse. A letter of comment, if issued, 
shall provide reasonablv detailed recommendations for remedial, 
corrective actions by the participating CPA firm so that the SQR 
Committee can evaluate whether the CPA firm's response to 
significant deficiencies noted in the review is a positive one, 
consistent with the objectives of the SQR program, and whether 
the actions taken or planned b\ the participating CPA firm 
appear appropriate in the circumstances. 

(d) The SQR report shall describe the limited scope of the 
re\ iew and shall not express an opinion or an\ form of assurance 
about the re\iewed CPA firm's quality control policies and 
procedures for its accounting practice, it shall state whether 
anvthing came to the attention of the review team which caused 
them to believe that anv of the engagements submitted for 
review did not confonn with the requirements of professional 
standards in all material respects and. if applicable, describe the 
general nature of significant departures from those standards. 

(e) An unmodified report includes the review team's 
conclusion that nothing came to its attention that caused its 
members to believe that the engagements submitted for rev iew 
did not conform w ith the requirements of professional standards 



in all material respects. 

(f) A modified report includes the review team's conclusion 
that nothing came to its attention that caused its members to 
believe that the engagements submitted for review did not 
conform with the requirements of professional standards in all 
material respects with the exception of certain reservations 
which are noted in the report. 

(g) An adverse report includes the review team's conclusion 
that the participating CPA firm did not have reasonable 
assurance of confonning with professional standards in the 
conduct of its accounting practice during the year under review. 

Aiilhorily G.S. 93-12(80. 

SECTION .0400 - SQR ADVISORY COMMITTEE 

.0401 SQR ADVISORY COMMITTEE - 
MEMBERS AND DUTIES 

(a) The SQR Advisory Committee shall consist of six CAPS 
appointed b\ the Board and one Board member appointed b\' the 
Board's President. 

(b) The SQR Committee shall: 

( 1 ) beginning January I, 1996, review all modified and 
adverse SQR reports and letters of comments, if anv. 
submitted bv review team captains under the SQR 
program; 

(2) consider all objections filed pursuant to 21 NCAC 8M 
.0402(a); and 

(3) make recommendations to the Board consistent with 
these Rules concerning each of Subparagraphs (b)( I ) 
and (2)of this Rule. 

(c) Prior to making anv recommendations to the Board, the 
Committee shall give notice of its proposed recommendation to 
the CPA firm to which the recommendation pertains. 

(d) The Committee shall also recommend remedial action to 
participating CPA firms receiving modified or adverse reports 
which, if followed, could increase the participating CPA fimi's 
ability to perfomi quality services in the public practice of 
accounting. 

(e) The Committee shall report at least annually to the Board 
on its activities and, further, at any time the Board requests a 
special report. 

AiilhorinG.S. 93-12(2): 93-1 2(8c). 

.0402 OBJECTIONS TO SQR ADVISORY 
COMMITTEE 

(a) A participating CPA firm may file an objection with the 
SQR Advisor. Committee \s ith regard to an SQR report within 
30 da\s from the date the report is delivered pursuant to 21 
NCAC 8M .0306(a). In any other matter before the Committee, 
a CPA tlrm to which a proposed recommendation pertains mav' 
file an objection w ithin 30 da>s from notice of the Committee's 
recommendation. 

(b) All objections shall be in writing and shall be addressed 
to the Committee at the Board's address set forth in 21 NCAC 
8 A .0102. Objections are filed when received b\ the Board. 



706 



NORTH CAROLINA REGISTER 



October 15, 1998 



13:8 



PROPOSED RULES 



(c) An objection concerning an SQR report shall contain: 



(1) 
(2) 
(3) 
(4) 

(5) 



the name of the reviewed CPA firm; 

the name of the review team captain; 

the date the review was completed; 

the conclusions made in the report to which the 

participating CPA firm objects; and 

in sufficient detail, the participating CPA tlrm's 

reasons for objecting to the report's conclusions, 
(d) Objections to proposed recommendations of the 
Committee shall identify the proposed recommendation and shall 
state the CPA firm's reasons for disagreeing with the 
Committee's proposed recommendation in sufficient detail. 

AiithonnG.S. 93-12(2): 93-12iHc}. 

.0403 REVIEW OF PROTEST 

(a) Within 60 da>s of recei\ing an objection from a CPA 
firm, the SQR Advisor*' Committee shall render its 
determination in response to the objection. It ma>. in its 
discretion, propose to recommend to the Board that the SQR 
report be amended or alter the recommendation it has proposed 
to make to the Board. 

(b) During its review of an\ matter raised b_\ an objection, the 
SQR Advisor}' Committee may gather infomiation (including 
an\ review team's work papers, checklists, and all other 
information submitted to a review team b\ a participating CPA 
finn)and conduct inter\iews. including interxiews of members 
of a review team or the objecting CPA firm. 

(c) If the CPA firm and the Committee ar. unable to resoKe 
the matter informalK. the Committee shall submit its 
recommendation to the Board with notice to the objecting CPA 
firm. The objecting CPA firm then has 30 da\ s from such notice 
to object to such recommendation b\ filing an objection w ith the 
Board. The objection shall comply with the requirements of 21 
NCAC 8IVI .0402(d) and is filed when received b> the Board. 

(d) The Board shall review the recommendation of the 
Committee and the objection and then, if the matter is not 
resoKed informall\. the Board or the CPA firm max set the 
matter for hearing pursuant to Article 3A of G.S. Chapter 1 50B. 

AiiihorinG.S. 93-12(2): 93-12(8c): 150B-2(2): 150B-41(c). 

SUBCHAPTER 8N - PROFESSIONAL ETHICS AND 
CONDUCT 



Section includes but is not limited to deception in: 

( 1 ) obtaining or maintaining employment; 

(2) obtaining or keeping clients; 

(3) obtaining or maintaining certification, retired status, 
or exemption from SQR; 

(4) reporting CP credits; 

(5) certifying the character or experience of exam or 
certificate applicants; 

(6) impKing abilities not supported b> \alid education, 
professional attainments, or licensing recognition; 

(7) asserting that services or products sold in connection 
with use of the CPA title are of a particular quality or 
standard w hen they are not; 

(8) creating false or unjustified expectations of favorable 
results; 

(9) using or permitting another to use the CPA title in or 
with a fonn of business not permitted b\ the 
accountancy laws or rules; 

(10) pemiitting a p e rson or firm an\ one not certified in this 
state (including one licensed in another state) to 
unlaw fulK use the CPA title in this s tat e ; or state or to 
unlaw fully operate as a CPA tlrm in this state; or 

(11) falsifying a rexiew. report, or any required program or 
checklist of any quality reviexv program. 

Aiithorin-G.S. 55B-12: 5'C-2-01: 93-12(9). 

.0208 REPORTING CONVICTIONS, JUDGMENTS, 
AND DISCIPLINARY ACTIONS 

(a) Criminal Actions. A CPA shall notify the Board xvithin 
30 days of anx conxiction or finding of guilt of or pleading of 
nolo contendere to: 



(1) 
(2) 



SECTION .0200 



RULES APPLICABLE TO ALL 
CPAs 



a felony ; or 

any crime an essential element of which is dishonesty, 

deceit, fi^aud. a xiolation of federal or state tax laxv. or 

a violation of the rules of Professional Ethics and 

Conduct contained in this Subchapter. 

(b) Civil Actions. A CPA shall notify the Board within 30 

dax's of any judgment or settlement in a civil suit, bankruptcx 

action, administrative proceeding, or binding arbitration, the 

basis of xxhich is grounded upon an allegation of gross 

negligence, dishonesty. fi"aud. misrepresentation, incomp e t e ncy. 

incompetence, or violation of anx federal or state tax laxx and 

xvhich was brought against either the CPA or a North Carolina 

office of a CPA firm of x\hich the CPA was a managing partner 

Authorin-G.S. 55B-12: 5-C-2-01: 93-12(9). 



.0202 DECEPTIVE CONDUCT PROHIBITED 

(a) Deception Defined. A CPA shall not engage in deceptive 
conduct. Deception includes fraud or misrepresentation and 
representations or omissions xvhich a CPA either knox\s or 
should know have a capacity or tendency to deceix e. Deceptive 
conduct is prohibited xvhether or not anxone has been actually 
deceixed. Deception includes not onlx deceptive statements but 
also includes the knoxving failure to disclose material facts. 

(b) Prohibited Deception. Prohibited conduct unde"- this 



SECTION .0300 - RULES APPLICABLE TO ALL CAPS 

WHO USE THE CPA TITLE IN OFFERING OR 

RENDERING PRODUCTS OR SERVICES TO 

CLIENTS 

.0302 FORMS OF PRACTICE 

(a) Authorized Fomis of Practice. A CPA shall not dir e ctly 
or i ndir e ctlx offer or render accounting s e rvic es (including tax 
and manag e m e nt advisorx' s e rv i c e s) who uses CPA in or x\ ith the 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



707 



PROPOSED RULES 



name of the business or offers or renders attest services in the 
public practice of accountanc\ to clients shall do so onl\ te 
cli e nt s — e xc e pt through a duK authorized CPA sole 
proprietorship, partn e rship — ef — CAPS, partnership. CP.A 
Professional Corporation. Professional Limited Liabilit\ 
Compan_\. or Registered Limited Liabilitx Partnership. 

(b) Authorized Partn e rs. Ownership. A CPA s hall not e ngag e 
in th e public practice of accountancy with a partn e r w ho i s 
an\on e oth e r than the hold e r of an unr e xoUed and curr e ntl> \alid 
CPA certificat e . A CPA firm, with the exception of Professional 
Corporations oraanized under G.S. 5.^B or Professional Limited 
Liabilit\ Companies organized under G.S. 57C. shall compK 
with the respective ownership requirements of those laws and 
ma\ ha\e a minorirs ownership of up to 49 percent owned b\ 
non-CP.-\ emplo\ees. A CPA tlrm shall ha\e maiorit\ 
ownership of at least 51 percent and be controlled in Jaw and 
fact In holders of \alid CP.A certificates who ha\e the 
unrestricted pri\ilege to use the CPA title and to practice public 
accountancN in a jurisdiction and at least one whom shall be 
licensed bv this Board. 

fe4 Ancillar> Practic e . .A CPA may. through anoth e r lawful 
form of prof es sional practi ce , o ffer or r e nd e r such non attest 
accounting se rx ic es a s ar e ancillar> to anoth e r l e arned prof e ssion 
r e gulat e d b > a statutoriK authoriz e d lic e nsing board in thi ' - '.-tate: 
fu rth e r pro\ id e d. th e CPA i s lic e n se d h\ th e r e sp e ctix e lic e n s ing 
board and off e rs or r e nders thos e s e r\ ic e s through a busin e ss 
form authoriz e d b> th e r e sp e ctix e licen s ing board and do e s not 
ho l d out th e non CPA finn as a CPA firm. t\n\ such CPf\ must 

> e rth e l e ss — r e gist e r — for SQR — as — an — e x e mpt — indixidi 



ftevt 



K — as — an — e x e mpt — mdnidual 
practition e r. 

fd4(c) CP.A Firm Registration Required. A CPA shall not 
e ngag e in th e public practic e of accountancv offer or render 
professional services through a CP.A tlrm which is in violation 
of the registration requirements of 21 NCAC 8J .0008. 8J .0010. 
or th e SQR r e quir e ments of 21 NCAC 8 VI .0102. 

fe)(d) Super\ision of CPA Offic e s. Firms. Ever\ CPA office 
Of CP.A tlmi and each registered office in North Carolina shall 
be acti\el\ and localK super\ised b\ a designated actix e h 
lic e n se d North Carolina CPA currentK licensed by this Board 
whose priman. responsibility and a corresponding amount of 
time shall be work perfonned in that office. 

(e) CP.A Firm Requirements for Non-CPA Ownership. A 
CPA firm and its managini; CP.A partner shall be held 
accountable for the following [n regard to a non-CP.A owner: 
( I ) a non-CPA owner shall be a natural person: 

a non-CP.A owner shall be acti\el\ engaged in 



Li] 



iiJ 



pro\ iding ser\ ices to the CP.A t1nn or its clients as his 

or her principal occupation: 

a non-CPA owner shall compK with al] applicable 

accountancN statutes and the administrati\e code: 

a non-CPA owner shall be of good moral character 

and shall be dismissed and disqualified from 

ownership for any conduct that, if committed by a 

licensee, would result in a discipline pursuant to G.S. 

93-12(9): 

a non-CP.A owner shall report his or her name, home 

address, home phone number, social securit^ number. 



and percentage of ownership of the CPA firm on the 
CP.A firm's registration: 

(6) a non-CPA owner's liabilit^ in a registered limited 
liability partnership: and 

(7) a non-CPA owner's name ma\ not be used in or with 
the name of tlie CPA firm or iield out to clients or the 
public that the non-CPA owner is a CPA. 

Auihorin-C.S. 558-12: 5'C-2-0l: 93-1 2i9i. 

.0303 OBJECTIN ITV AND CONFLICTS OF 
INTEREST 

(a) Personal Financial Interest in Ad\ice. When offering or 
rendering accounting or related financial, tax. or management 
ad\ ice. a CP.A shall be objective and shall not place the CPA's 
own financial interests nor the financial interests of a third party 
ahead of the legitimate financial interests of the CPA's client or 
the public in an\ context in which a client or the public can 
reasonabK expect objectivity from one using the CPA title. 

(b) Expectation of Objectivity Presumed. If the CP.A uses the 
CPA title in an\ wa) to obtain or maintain a client relationship, 
the Board will presume the reasonable expectation of objecti\ it>. 

(c) Acceptance of a Commission or Referral Fee. A CPA 
shall not pay be prohibited from paying a commission to obtain 
a client, nor acc e pt ''" rom accepting a commission for a referral 
to a client, of produc or sen ices of oth e rs, others except when 
the CP.A or CP.A firm also performs attest ser\ ices, during the 
period of the attest services engagement and the period covered 
by any historical statements invoKed in such attest services. 
This Rul e shall not prohibit payments tor th e purchas e of an 
accounting practic e , r e tir e m e nt paym e nts to individual s form e rly 
e ngag e d in th e practice of public accounting, or paym e nts to 
heirs or estat e s. 

(d) Acceptance of a Contingent Fee. 

( 1 ) The offering or rendering of professional serv ices for. 
or the receipt of. a disclos e d contingent fee bv a CPA 
is not prohibited except for engaging to render or 
rendering bv a CP.A for a contingent fee: 

(A) of professional serv ices for. or the receipt of 
such a fee from, any person for w hom the CPA 
also performs attest serv ices, during the period 
of the attest services engagement and the 
period covered bv anv historical financial 
statements involved in such attest services; and 

(B) for the preparation of original or amended tax 
returns or claims for tax refunds. 

(2) Fees are not regarded as being contingent if fixed bv 
courts or other public authorities or. in tax matters, if 
determined based on the results of judicial 
proceedings or the findings of gov e rnm e ntal ag e nci e s 
formally adopted findings that are binding upon the 
governmental agencies that make the findings. 

(e) For tfie purposes of thus Rule, a CP.A shall provide 
disclosure to a client in accepting a commission, referral, or 
contingent fee. A CP.A shall provide disclosure in a written 
statement of tJie service or product to be rendered or referted 
with the contingent fee, commission, or referral fee to be 



708 



NORTH CAROLINA REGISTER 



October 15. 1998 



13:8 



PROPOSED RULES 



charged or received. The written statement shall be dated: 
signed b\ the CPA and client in advance of any sale, referral, or 
service provided; and a copy given to the client. 

Aiithorin- G.S. 55B-12: 5X^-2-01: 93-12(9). 



.0306 ADVERTISING OR OTHER FORMS OF 
SOLICITATION 

(a) Deceptive Advertising. A CPA shall not seek to obtain 
clients b\ advertising or using other forms of solicitation in a 
manner that is deceptive. 

(b) Specialt> Designations. A CPA ma> ad\ertise the nature 
of ser\'ices provided to clients but the CPA shall not advertise or 
indicate a specialt\ designation or other title unless the CPA has 
met the requirements of the granting organization for the 
separate title or specialt\ designation and the indi\idual is 
cuirentK on active status and in good standing with the granting 
organization for the separate title or specialty designation. 

(c) The CPA firm shall offer to perform or advertise 
professional services onK in the exact name of the CPA firm as 
registered with the Board. 

(d) Anv CPA or CPA firm offering to or performing 
professional services via the internet shall include the following 
information on the internet: 



(4} 



CPA business or CPA firm name: 

principal place of business: u 

business phone: and 

North Carolina certificate number and North Carolina 



as state of certification, 
(e) The use of the phrase "certified public accountant(s)" or 
"CPA(s)" jn or with the name of any business entity on 



letterhead, reports, business cards, brochures, office signs, 
telephone directories, or any other advertisements or forms or 
solicitation is prohibited e.xcept for registered CPA firms. 

Authonn-G.S. 55B-12: 5'C-2-01; 93-12(9). 

.0307 CPA FIRM NAMES 

(a) Deceptive Names Prohibited. A CPA or CPA firm shall 
not trade upon the CPA title through use of any name that would 
have the capacity or tendencv to deceive. The name of one or 
more fomier members of the CPA firm, as defined jn 21 NCAC 
8A .0301. ma\ be included jn the CPA firni name. The name of 
a non-CPA owner in a CPA finn name is prohibited. 

(b) Style of Practice. It is considered misleading if a CPA 
firm practices under a name or style which would tend to imply 
the existence of a partnership or registered limited liability 
partnership or a professional corporation or professional limited 
liabilitv company of more than one CPA shareholder or CPA 
member or an association when in fact there is no partnership 
nor is there more than one CPA shareholder or CPA member m 
the of a CPA firm. For example, no CPA firm having just one 
CPA owner nia\' have as a part of its name the words 
"associates" or "company" or their abbreviations, ft is also 
considered misleading if a CPA renders non-attest professional 
services through a non-CPA firm using a name that implies any 
non-licensees are CPAs or that is confusingly similar to the 



name of a CPA fimi. 

(c) Assum e d Nam e s Subj e ct to Approval. B e for e nny CPA 
finn u se s an assum e d nam e (as d e scrib e d in G. S. 66 68. 75 1.1) 
it must submit th e propo se d nam e for Board approval in ord e r to 
assur e that s uch nam e is not misl e ading or d e ceptiv e to the 
public. Any CPA firm that has continuously used an assumed 
name approved by the Board prior to April J^ 1999. may 
continue to use the assumed name, so long as the CPA firm js 
only owned by the individual practitioner, partners, or 
shareholders who obtained Board approval for the assumed 
name. A CPA firm (or a successor fimi bv sale, merger, or 
operation of law) mav continue to use the surname of a retired 
or deceased partner or shareholder in the CPA firm's name so 
long as that use is not deceptive. 



.AiithorinG.S. 55B-12: 5''C-2-01: 93-12(9). 



CHAPTER 32 - BOARD OF MEDICAL EXAMINERS 

Notice is hereby given in accordance with G.S. 1508-21.2 
that the North Carolina .Medical Board intends to adopt 
the rules cited as 21 NC.4C 32M.0015; 21 .\'C.4C 32R .0001- 
. 0004: 21 NC.4C 32S . 000 1-. 0018. amend the rules cited as 21 
NC.4C 32F.0103: 21 NCAC 32M .000I-.0012 and repeal the 
rules cited as 21 NCAC 320 .0001-.0021. Notice of Rule- 
making Proceedings was published in the Register on January 
I. l'^98 for 21 NCAC 32 F .0003. Notice of Rule-making 
Proceedings was published in the Register on April 1. 1 998 for 
21 NC.4C^32M.0001-.0012. .0015: 21 NC.4C 32R.000l-.0004. 
Notice of Rule-making Proceedings was publish' d in the 
Register on December 16. 1996 for 21 NC.4C 320 .0001 -.0021 
and 21 NC4C 32S.000I-.0018. 

Proposed Effective Date: 

May 1, 1999 - 21 NCAC 32F .0003: 21 NCAC 32M .0001- 

.0012. .0015: 21 NCAC 320 .0001-.0021: 21 NC4C 32S.0001- 

.0018. 

Janiian- 1, 2000 - 21 NC.4C 32R .0001 -.0004 

A Public Hearing Mill be conducted on October 30. 1998 at the 

North Carolitm Medical Board. 1201 From Street. Raleigh. NC 

2 '609 at the following times: 

21 SC.4C32F. 0003 -5:00p.m. 

21 ^CA C 32 R . 000 1 -. 0004 -3:00p.m. 

21 1SC.4C 32M .0001:0012,. 0015 - 1:00p.m. 

21 \C.4C 320 .0001-.0021; 32S .0001:0018 - 9:00a.m. 

Reason for Proposed Action: 

21 A'C.4C 32F .0103 - This rule will allow compliance with 

1997 NC Session Laws which states each physician's 

registration fee is to be paid annually on each physician's 

birthday, effective January 1. 1998. 

21 SCAC32M .0001:0012. .0015 - The change in rules was 

necessaiy in order to reflect actual process, to improve agency 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



709 



PROPOSED RULES 



responsiveness, to clunf\- rules and definitions for licensees in 
order to maximize comprehension and thereby compliance. 
21 \CAC 320 .0001:0021 - These rules will clarify the 
licensing, discipline, and practice guidelines for physician 
assistants and the physician assistant's supervising physicians. 
21 .\C4CJ2R .0001 -.0004 - The statute alloMS the SC Medical 
Board to write rules requiring physicians to complete no more 
than 15(1 hours ol continuing medical education in a three year 
period. 

21 \C4C 32S .0001-0018 - These rules will clarify the 
licensing, discipline, and practice guidelines for physician 
assistants and the physician assistant's supervising physicians. 

Comment Procedures: Comments may be mailed to Helen 
Meelheim. Rule-iuakuig Coordinator at the .\'C Medical Board. 
1201 Front Street. Raleigh. NC 2'609. Verbal comments may 
be presented at the public hearing. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of state or local governitient funds. These Rules do not 
have a substantial economic impact of at least Jive million 
dollars (S5.000.000i in a 12-/iu>nth period. 

SUBCHAPTER 32F - ANNUAL REGISTRATION 

SECTION .0100 - REGISTRATION 

.0103 FEE 

Each ph\sician shall pa\ a bi e nnial an annual registration fee 
of tw© one hundred dollars ( S2Q0.00 ) SIOO.OO to the Board 
even,' odd numbered \ear in accordance with G.S. 90-15.1: 
except, each physician holding a resident's training license shall 
pay a bi e nnial an annual registration fee of t\\onr\ five fifteen 
dollars (S25.00 ) ($15.00 ) and ever\ ph\sician who holds a 
special \olunteer license shall pay a biennia l an annual 
registration fee often dollars ($10.00). 

Authority G.S. 90-15.1: 90-18(13): 90-18.1. 

SUBCHAPTER 32M - APPRO\ AL OF NURSE 
PRACTITIONERS 



.0001 

The 



(2 



(4) 



DEFINITIONS 

following definitions appK to this Subchapter: 

"Medical Board" means the North Carolina Medical 
Board. 

"Board of Nursing" means the Board of Nursing of 
the State of North Carolina. 

"Joint Subcommittee" means the subcommittee 
composed of members of the Board of Nursing and 
Members of the Medical Board to whom 
responsibility is gi\en b> G.S. 90-6 and G.S. 90- 
I71.23(b)( 14) to de\elop rules to govern the 
performance of medical acts b\ nurse practitioners in 
North Carolina. 

'Nurse Practitioners or NP" means a currentK' 
licensed registered nurse approved to perform medical 



acts who functions at th e dir e ction of or und e r the 
sup e r\ision of under an agreement with a licensed 
ph\sician for ongoin g super\ision. consultation- 
collaboration and e\aluation of the thos e medical aetsr 
acts performed. Onl> a registered nurse appro\ed b\ 
the Medical Board and the Board of Nursing ma\ 
legally identif\ oneself as a Nurse Practitioner. It is 
understood that the nurse practitioner. b\ \ irtue of RN 
licensure, is independentK accountable for those 
nursing acts which he or she ma\ perform. 

(5) "Nurse Practitioner .Applicant" means a registered 
nurse who ma\ function prior to full appro\al as a 
Nurse Practitioner in accordance with Rule .0003fe4 
(b)(4) of this Subchapter. 

(6) "Super\ision" means the ph\sician"s function of 
overseeing medical acts performed b\ the nurse 
practitioner. 

(7) "Collaborati\e practice agreement" means the 
arrangement for nurse practitioner-ph\sician 
continuous a\ailabilit\ to each other for on-going 
supervision, consultation, collaboration, referral and 
e\aluation of care provided by the nurse practitioner. 

(8)ffl "Primarv Superv ising Ph\sician" means the licensed 
ph\sician approved by the Medical Board who. b> 
signing the nurse practitioner application, is held 
ocountable for the on-going sup e rvision super\ ision. 
consultation, collaboration and evaluation of the 
medical acts performed b\ the nurse practitioner as 
defined in the site specific written protocols. 

(a) The primar\ supervising physician shall 
assume the responsibilitv of assuring the 
Boards that the nurse practitioner is qualified 
to perform those medical acts described in the 
site specific written protocols. 

(b) A physician [n a graduate medical education 
program, whether fulh licensed or holding 
onK a resident's training license, shall not be 
named as a primary supervising phvsician. 

(c) A phvsician jn a graduate medical education 
program who js also practicing jn a non- 
training situation mav supervise a nurse 
practitioner in the non-training situation if fulK 
licensed and approved to be a supervising 
ph\ sician bv the Medical Board. 

(d) All phvsicians who mav be a primary 
superv ising physician of nurse practitioner(s) 
in any manner shall be approved in accordance 
w ith this Subchapter. 

(9)f8-) "Back-up Supervising Physician" means the licensed 
phvsician who. bv signing an agreement v\ith the 
nurse practitioner and the primary supervising 
physician(s). is shall be held accountable for 

s up e rvising the p e rformanc e supervision. 

consultation, collaboration and evaluation of medical 
acts bv the nurse practitioner in accordance w ith the 
site specific written protocols when the Primary 
Supervising Phvsician is not available. 



710 



NORTH CAROLINA REGISTER 



October 15. 1998 



13:8 



PROPOSED RULES 



(a) The signed and dated agreements for each 
back-up supervising physician(s) shall be 
maintained at each practice site. 

(b) A physician in a graduate medical education 
program, whether fulh licensed or holding 
only a resident's training license, shall not be 
named as a back-up supervising ph\sician. 

(c) A physician m a graduate medical education 
program who js also practicing in a non- 
training situation may be a back-up supervising 
physician to a nurse practitioner in the non- 
training situation if fulK licensed and has 
signed an agreement w ith the nurse practitioner 
and the primary supervising physician. 

(I0)(4) "Approval" means authorization by the Medical 
Board and the Board of Nursing for a registered nurse 
to practice as a nurse practitioner in accordance with 
this Subchapter. 
(I IM -W "Written standing protocols" means the signed and 
dated set of written practice guidelines maintained at 
each practice site which describe the prescribing 
privileges, treatments, tests and procedures that define 
the scope of the nurse practitioner's medical acts in 
that setting. Clinical practice issues that are not 
covered by the written protocols require nurse 
practitioner/physician consultation, and 

documentation related to the treatment plan. 

( 12) "Volunteer practice" means practice without 
expectation of compensation or payment ( monetaiA'. 
[n kind or otherwise) to the nurse practitioner either 
directly or indirectly. 

( 13) "Disaster" means a state of disaster as defined in G.S. 
l66A-4(3) and proclaimed b> the Governor, or b\ the 
General Assembly pursuant to G.S. I66A-6. 

(14) "Interim Status" means the pri\ ilege that is given to a 
nevs graduate of an approved nurse practitioner 
educational program or a registered nurse seeking 
initial approval in North Carolina with limited 
priyileges. as defined in Rule .0003(b)(4) of this 
Subchapter, while awaiting final approval to practice 
as a nurse practitioner. 

(15) "Temporary Approval" means authorization by the 
Medical Board and the Board of Nursing for a 
registered nurse to practice as a nurse practitioner in 
accordance with this Rule for a period not to exceed 
18 months yvhile awaiting notification of successful 
completion of the national certification examination. 

Author in- G.S. 90-6: 90- 1 Si 14): 90-18.2. 

.0002 SCOPE OF PRACTICE 

The nurse practitioner shall be responsible and accountable for 
the continuous and comprehensive management of a broad range 
of personal health services for which the nurse practitioner is 
educationally prepared and for which competency has been 
maintained, with physician supervision and collaboration as 
described in 21 NCAC 32M .0010. 32M .0009. These services 



include but are not restricted to: 

( 1 ) promotion and maintenance of health; 

(2) prevention of illness and disability ; 

(3) diagnosing, treating and managing acute and chronic 
illnesses; 

(4) guidance and counseling for both individuals and 
families; 

(5) prescribing, administering and dispensing therapeutic 
measures, tests, procedures and drugs; 

(6) planning for situations beyond the nurse practitioner's 
expertise, and consulting yvith and referring to other 
health care providers as appropriate; and 

(7) evaluating health outcomes. 

.4 lit hor in- G.S. 90-18(14). 

.0003 NURSE PRACTITIONER APPROVAL 

(a) Qualifications for nurse practitioner approval. A 
registered nurse shall be approved by the Medical Board and the 
Board of Nursing Board before the individual applicant may 
practice as a nurse practitioner. The Boards may grant approval 
to practice as a nurse practitioner to an individual applicant who: 

( 1 ) is currently licensed as a registered nurse by the Board 
of Nursing; 

(2) has successfully completed an approved educational 
program as outlined in Rule .0004 of this Subchapter; 
or, as of January \^ 2000. meets the certification 
requirements set forth in Rule .0004(c) of this 
Subchapter; 

(3) has an unrestricted license to practice as a registered 
nurse and, if applicable, an unrestricted approval to 
practice as a nurse practitioner unless the Boards 
consider such condition and agree to approval; 

(4) submits any infomiation deemed necessary to evaluate 
the application; 

(5) has a collaborative practice agreement with a primary 
supervising phys i cian agr ee m e nt; physician; and 

(6) pays the appropriate fee. 

(b) Application for nurse practitioner approval. 



(1) 



(2) 



(3) 



Application for nurse practitioner approval shall be 
made upon the appropriate forms and must shall be 
submitted jointly by the nurse practitioner and primary 
supervising physician(s). 

Applications for first-time approval in North Carolina 
shall be submitted to the Board of Nursing Board and 
then proc e ss e d approved by both Boards as folloyvs: 

(A) the Board of Nursing Board will verify' 
compliance with Subparagraphs (a)( 1 ) - (4) of 
this Rule; 

(B) the Medical Board will verify- compliance with 
Subparagraphs (a)(4) - (6) of this Rule; and 

(C) the appropriate Board will notify applicant of 
final approval status. 

Applications for approval of changes in practice 
arrangements for a nurse practitioner currently 
approved to practice in North Carolina: 
(A) addition or change of primary supervising 



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711 



PROPOSED RULES 



(B) 



(C) 



ph\sician shall be submitted to the Medical 

Board; 

request for change(s) in the scope of practice 

shall be submitted to the Nur s ing Board; Joint 

Subcommittee: and 



the appropriate Board will notify applicant of 
final approval status. 

(4) Interim status for nurse practitioner applicant may be 
granted as follows: 

(A) a registered nurse who is a new graduate of an 
approved nurse practitioner educational 
program as set forth in Rule .0004 of this 
Subchapter: or 

( B ) a registered nurse seeking first time approval to 
practice as a nurse practitioner in North 
Carolina who has worked previously as a nurse 
practitioner in another state and who meets the 
nurse practitioner educational requirements as 
set forth in Rule .0004 of this Subchapter: and 

(C) the Boards Nur s ing Board has have issued 
interim approval with the follov\ing limitations: 

(i) no prescribing privileges: 

(ii) primary or back-up physicians phv s i cian 

on sit e shall be continuously available 

for appropriate ongoing supervision. 

review consultation, collaboration and 

countersigning of notations of medical 

acts in all patient charts v\ ithin 2 1 hour s 

tvso working days of nurse practitioner 

applicant-patient contact: and 

(iii) face-to-face consultation with the 

primary supervising physician shall be 

weekly with documentation of 

consultation consistent with Rule 

.0009(d)(4) of this Subchapter: and 

(iv) fHi4 may not exceed a period of six months. 

(5) Beginning .January 1. 2000. first time applicants who 
meet the qualifications for approval, but are awaiting 
ceilitlcation from a national credentialing bodv 
a pproved by the Board of Nursing, may be granted a 
temporary approv al to practice as a nurse practitioner. 
Temporan approval is valid for a period not to exceed 
18 months from the date temporary ap proval is 
granted or until the results gt" the applicant's 
certification examination are available. v\hichever 
comes first. 

(6)f^ The registered nurse who was prev iousK approved to 
practice as a nurse practitioner in this state shall: 

(A) meet the nurse practitioner approval 
requirements as stipulated in Subparagraphs 
(a)(1). (a)(3) -(aK6): 

(B) complete the appropriate application: aftd 

(C) receive notification of approval from the 
appropriate Board. Board: and 

(D) meet the consultation requirements as outlined 
in Ruje .0009(d)(3) and (1) of this Subchapter. 

(7) (-^ If for any reason a nurse practitioner 



discontinues working m vs ithin the approved 
sup e rvision phy s ician(s) nurse practitioner- 
supervising physician(s) arrangement, the 
Boards shall be notified in writing and the 
nurse practitioner's approval shall 
automatically terminate or be placed on an 
inactive status until such time as a new 
application is approved in accordance with this 
Subchapter. Special consideration mav be 
given in an emergency situation. 
(8) Volunteer Approval for Nurse Practitioners. The 
Boards mav grant approval to practice m a volunteer 
capacit^ to a nurse practitioner v\ho has met the 
qualifications as outlined m Rule .0003(a)( 1 ) - (6) of 
this Subchapter. 

Auihorin- G.S. 90-18(13). il4i: 90-18.2: 90-ri.20i'): 90- 
l~ 1.23(b): 90-ri.42. 

.0004 REQUIREMENTS FOR APPROVAL OF NURSE 
PRACTITIONER EDUCATIONAL PROGRAMS 

(a) The Joint Subcommittee shall establish the requirements 
for approval of nurse practitioner educational programs. 

(b) A nurse practitioner applicant who completed a nurse 
practitioner educational program prior to December 31. 1999 
shall provide to the Board of Nursing evidence of successful 
completion of a course of formal education which contains a 
core curriculum including 400 contact hours of didactic 
education and 400 contact hours of preceptorship or superv ised 
clinical experience. 

(1 ) The core curriculum shall contain as a minimum the 
follow ing components: 

(A) health assessment and diagnostic reasoning 
including: 

(i) historical data; 
(ii) physical examination data; 
(iii) organization of data base; 

(B) phannacology : 

(C) pathophysiology; 

(D) clinical management of common health care 
problems and diseases related to: 

(i) respiratory system; 

(ii) cardiovascular system; 
(iii) gastrointestinal system: 
(iv) genitourinary sv stem; 

(v) integumentary system; 
(vi) hematologic and immune systems; 
(vii) endocrine system: 
(viii) musculoskeletal system; 
(ix) infectious diseases; 

(x) nervous system; 

(xi) behavioral, mental health and substance 
abuse problems: 

(E) clinical preventative services including health 
promotion and prevention of disease: 

(F) client education related to Parts (b)( 1 )(D) and 
(E) of this Rule: and 



712 



NORTH CAROLINA REGISTER 



October 15, 1998 



13:8 



PROPOSED RULES 



J 



(G) role development including legal, ethical. 

economical, health policy and interdisciplinary 

collaboration issues. 
(2) Nurse practitioner applicants who ma> be exempt 
from components of the core curriculum requirements 
listed in Subparagraph (b)(1) of this Rule are: 

(A) ' An> nurse practitioner approved in North 

Carolina prior to Januan. 18. 1981. is 
permanently exempt from the core curriculum 
requirement. 

(B) A nurse practitioner certified b\ th e Nationa l 
Certification Corporation of th e Obst e trics. 

G\nccolog> aftd N e onata l Specia l ist s : 

Association of Wom e ns H e alth of N e onatal 
Nurses: — Am e rican — Nurs e s — Cr e d e ntialing 
Commission: Am e rican Nurs e s Association 
and National C e rtification of P e diatric Nurs e 

Practition e rs and Nur se s a national 

credentialing bodv approved by the Board of 
Nursing who also provides evidence of 
satisfying Parts (bKl)(A) - (C) of this Rule 
shall be exempt from core curriculum 
requirements in Parts (b)(1)(D) - (G) of this 
Rule. Evidence of satisfying Parts (b)( 1 )(A) - 
(C) of this Rule shall include, but mav not be 
limited to: 

( i ) a narrative of course content: and 
(ii) contact hours. 

(C) A nurse practitioner seeking initial approval 
after January 1- 1998 shall be exempt from the 
core curriculum requirements if certified as a 
nurse practitioner in his'her specialty by a 
national credentialing body approved by the 
Board of Nursing as set forth in Subparagraph 
(b) of this Rule and when initial certification 
was obtained after ,lanuar\ _L 1998. 

(D) fG4 A nurse practitioner applicant, whose formal 

education does not meet all of the stipulations 

in Subparagraph (b) of this Rule. ma\ appeal to 

the Board of Nur s ing Joint Subcommittee on 

the basis of other education and experience. 

(c) Instead of educational program approval. aU nurse 

practitioner applicants v\ho are applying for or have received. 

first time approval to practice as a nurse practitioner on or after 

January f, 2000 shall be certified by a national credentialing 

body approved by the Board of' Nursing or be awaiting initial 

certification by a national credentialing bod\ approved by the 

Board of Nursing for a period not to exceed 1 8 months from date 

temporary approval is granted. 

AiahorinG.S. 90-IH(I4i: 90-1' 1.42. 

.0005 ANNUAL RENEWAL 

(a) Each registered nurse who is approved as a nurse 
practitioner in this state will, upon notification from the Medical 
Board. annualK renew said approval bv : 
( 1 ) Verifying current RN licensure; 



(2) Submitting the fee required in Rule .0012 of this 
Subchapter; and 

(3) Completing the renewal form. 

(b) For the nurse practitioner who had first time approval to 
practice after January 1, 2000. provide evidence of certification 
or recertification by a national credentialing body approved by 
the Board of Nursing. 

fb)(c) If the nurse practitioner has not renewed within 30 days 
of renewal date, set by the Medical Board, the approval to 
practice as a nurse practitioner will lapse. 

.Authorises. 90-6: 90-18(141: 90-l'l. 23(b). 

.0006 CONTINUING EDUCATION (CE) 

In order to maintain nurse practitioner approval to practice, 
beginning no sooner than two years after initial approval has 
been granted, the nurse practitioner mu s t shall earn 30 hours of 
continuing education ever} two years. At least three hours of 
continuing education every two years shall be the study of the 
medical and social effects of substance abuse including abuse of 
prescription drugs, controlled substances, and illicit drugs. 
Continuing Education hours are those hours for which approval 
has been granted by the American Nurses Credentialing Center 
(ANCC) and Accreditation Council on Continuing Medical 
Education (ACCME). or other national credentialing bodies 
approved by the Board of Nursing consistent with Rul e 
.000 ' I(2)(B) of this S e ction. Nursing. Documentation shall be 
maintained by the nurse practitioner at each practice site and 
made available upon request to either Board. 

.4iiihorlnG.S. 90-6: 90-18(14): 90-1" 1.23(14). 

.0007 INACTIVE STATUS 

(a) Any nurse practitioner who wishes to place his or her 
approval on an inactive status may notify' the Boards by 
completing the form supplied by the Boards. 

(b) The registered nurse with inactive nurse practitioner status 
shall not practice as a nurse practitioner. 

(c) The registered nurse v\ ith inactive nurse practitioner status 
who reapplies for approval to practice shall be required to meet 
the qualifications for approval as stipulated in Rule .0003(a)( 1 ). 
(a)(3) - (a)ff) (a)(6) and (b) of this Subchapter. 

.-liilliorliyG.S. 90-18(13): 90-18.2: 90-1" 1.36. 

.0008 PRESCRIBING AUTHORITY 

(a) The prescribing stipulations contained in the rules apply 
to writing prescriptions and ordering the administration of 
medications. 

(b) Prescribing and dispensing stipulations are as follows: 

( 1 ) Drugs and devices that may be prescribed by the nurse 
practitioner in each practice site must shall be 
included in the written s tand i ng protocols as outlined 
in Rule .0009(2) .0009(b) of this Subchapter. 

(2) Controlled Substances (Schedules 2. 2N. 3. 3N. 4. 5) 
defined bv the State and Federal Controlled 
Substances Acts may be procured, prescribed or 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



713 



PROPOSED RULES 



ordered as established in \\ritten standing protocols. 
pro\iding ail of the following restrictions 
requirements are met: 

(A) the nurse practitioner has an assigned DEA 
number which is entered on each prescription 
for a controlled substance; 

(B) dosage units for schedules 2. 2N. 3 and 3N are 
limited to a €>fte — w ee k's — suppK. exc e pt 
D e xtroamph e tamin e . — M e thylph e nidat e — and 
P e molin e for th e tr e atm e nt of Att e ntion D e ficit 
Di s o rde r or At te nt i on D e fic i t Disord e r with 
Hyp e ract i v i t> (ADHD) vshich ar e limit e d to a 
30 day suppK : and 

(C) the prescription or order for schedules 2. 2N. 3 
and 3N ma\ not be refilled. 

(3) The nurse practitioner may prescribe a drug not 
included in the site-specific written standing protocols 
onl\ as follows: 

(A) upon a specific written or verbal order obtained 
from th e s up e rvi s ing a primary or back-up 
supervising ph> sician before the prescription or 
order is issued b\ the nurse practitioner: and 

(B) the written or verbal order as described in Part 
(b)(3)(A) of this Rule mast shall be entered 
into the patient record and sign e d b> * h e nurs e 
practition e r w ith a notation that it is i ued on 
the specific order of th e s up o rv ising phvsician. 
a primary or back-up su perv ising ph\ sician and 
signed by the nurse practitioner and the 
physician. 

(4) Refills may be issued for a period not to exceed one 
year except for schedules 2. 2N. 3 and 3N controlled 
substances which may not be refilled. 

(5) Each prescription must shall be noted on the patient's 
chart and include the follow ing information: 

(A) medication and dosage: 

(B) amount prescribed: 

(C) directions for use: 

(D) number of refills; and 

(E) signature of nurse practitioner. 

(6) The prescribing number assigned by the Medical 
Board to the nurse practitioner must appear on all 
prescriptions issued by the nurse practitioner. 

(7) Prescription Format: 

(A) All prescriptions issued by the nurse 
practitioner shall contain the supervising 
phy sician(s) name, the name of the patient, and 
the nurse practitioner's name, telephone 
number, and prescribing number. 

(B) The nurse practitioner's assigned DEA number 
shall be written on the prescription form when 
a controlled substance is prescribed as defined 
in Subparagraph (b)(2) of this Rule. 

(c) The nurse practitioner must obtain approval to dispense 
the drugs and devices included in the written standing protocols 
for each practice site from the Board of Pharmacy, and shall 
carry out the function of dispensing dispense in accordance w ith 



21 NCAC 46 .1700, which is hereby incorporated by reference 
including subsequent amendments of the referenced materials. 

Aiilhorin- G.S. 90-6: 90-18(14): 90-1S.2: 90-1' 1.23(14): 90- 
ri. 42: 58 Fed. Reg. 31.1' 1 (1993) (to be codified al 2 1 C. F.R. 
1301). 

.0009 QUALITY ASSURANCE STANDARDS FOR A 
COLLABORATIVE PRACTICE AGREEMENT 

Sup e rvision shall b e provid e d by th e approv e d physician(s) as 



follows: 



(5^ 



f^ 



Availability; 



(a-) Tlw Guperx ising physician shaH be 

continuously av'ailabl e fer dir e ct 

communications — by radio. — t ele p h on e. — er 
telecommunicat i ons. 



^ The 



sup e rvising physician shall b e r e adily 
availabl e — far — con s ultation — ef — r e ferrals — of 
pati e nts from th e nurse practition e r. 

(€4 If th e nurs e practition e r is to p e rfomi duti e s at 

a s i t e away from the sup e rvising physician, fhe 



application — must 



ea#y 



spec i fy tlw 



circumstanc e s 



and 



-the- 



sup e rvi s ory 



arrang e m e nts. 
Writt e n Standing P rot oc ol s: 



fa-) Writt e n — standing — protocols — approv e d — attd 

s ign e d b> both th e sup e rv ising physician(s) and 
th e nurs e practition e r shall b e maintain e d in 
e ach practic e sit e : 

{h) Th e writt e n s tanding protocols shall includ e th e 

drugs, devic e s, m e dica l tr e atm e nts, t e sts and 
proc e dur e s that may b e pr e scrib e d, ord e r e d and 
impl e m e nt e d — b^ — the — nurs e practition e r 
con s i s t e nt with Rul e .0008 of this Subchapt e r, 
and w hich ar e appropriat e for th e diagnosis and 
tr e atm e nt of th e most commonly encountered 
health probl e ms in that practic e s e tting; 

^ The written standing protoc o ls s hall includ e a 

pr e d e t e nnin e d plan for e m e rg e ncy services; 

(4) Th e writt e n standing protocol s shall sp e cify th e 

proc e ss by which the nurs e pract i tion e r steH 
r e f e r a pati e nt to a physician oth e r than an 
approv e d s up e rv ising phv sician; 

fe) Th e nurs e practition e r shall b e pr e par e d to 

d e monstrat e upon r e qu e st to a memb e r of 
e ith e r th e Board of Nur s ing or th e Medical 
Board, or an ag e nt, th e ab i lity to p e rfomi 
m e dical acts a s outlined in th e s it e sp e cific 
writt e n standing protocols. 

Count e rsigning of M e dical ;\ctG: 

fa-) Th e maximum tim e int e rval b e tw ee n th e nurs e 

practition e r's contact with th e pati e nt and 
m e dical r e cord r e v i e w and count e rsigning of 
m e dical act s bv th e sup e rvising physician is 
sev e n davs for outpati e nt (clinic offic e ) nurs e 
practition e r pati e nt contacts. 

fb^ The — tiffle — int e rval — for — count e rsigning — of 



714 



NORTH CAROLINA REGISTER 



October 15, 1998 



13:8 



PROPOSED RULES 



} 



notations of m e dical acts in th e m e dical r e cords 

ef inpati e nts — (hospital. — long t e rm — eare 

institutions) b\ th e sup e rvising phx s ician s hall 

comply with th e ru les and regulations of th e 

institution, but at a minimum: 

(+) — th e initial workup, m e dical ord e rs and 

tr e atm e nt plan, sha ll b e count e rsign e d 

within s e v e n da> 5 of th e tim e of th e 

nurse practition e r pati e nt contact: and 

(+i^ in th e acut e inpati e nt se tting, th e initial 

work up. m e dical ord e rs and tr e atm e nt 
f4afl shall b e count e rsign e d and dat e d 
within two xvorking da> s of th e nurs e 
practition e r pati e nt contact. 

fe4 The — fime — int e rva l — b e tw oe n — the — nurs e 

practition e r pati e nt contact and countersigning 
b^^ — tb« sup e rv i sing phv s ic i an of the nurse 
practition e r's notations of m e dical acts in the 
m e dical r e cords — of — pati e nts — in — sp e cial 
community bas e d — eare — programs. — s«€h — as 
dialvsis and hospic e , shall compiv with th e 
rul e s and r e gulations of th e sp e cific car e 
program. 
(1) Sup e rvising Phvsicians: 

{it) A physician in a graduat e m e dical e ducation program. 

wh e th e r full> lic e ns e d or holding onlv a r e sid e nt's 
training l ic e ns e , sha l l not b e nam e d a s a sup e rv ising 
physician. 

<%^ A phvsician in a graduat e m e dical e ducation program 

who is also practicing in a non training s i tuation mav 
s up e rvis e a nurse practitioner in th e non training 
situ'.tion if fullv licensed and approv e d to supervise 
by th e M e dical Board. 
(e^ — AW — phy s icians — w4w — may — s up e rvis e — the — nur se 
practition e r in anv mann e r shall b e approv e d in 
accordanc e — with — this — Subchapt e r — b e for e — nurs e 
practition e r s up e rvi s ion occurs. 

(a) Availability: The primary or back-up supervising 
ph\sician(s) and the nurse practitioner shall be continuously 
available to each other for consultation by direct communication 
or telecommunication. 

(b) Written Protocols: 

(1 ) Written protocols shall be agreed upon and signed by 
both the primary supervising phvsician and the nurse 
practitioner, and maintained in each practice site. 

(2) Written protocols shall be reviewed at least vearlv. 
and this review shall be acknowledged by a dated 
signature sheet, signed by both the primary 
supervising phvsician and the nurse practitioner, 
appended to the written protocol and available for 
inspection bv members or agents of either board. 

(3) The written protocols shall include the drugs, devices, 
medical treatment, tests and procedures that mav be 
prescribed, ordered and implemented by the nurse 
practitioner consistent with Rule .0008 of this 
Subchapter, and which are appropriate for the 
diagnosis and treatment of the most commonly 



encountered health problems in that practice setting. 

(4) The written protocols shall include a pre-determined 
plan for emergency services. 

(5) The nurse practitioner shall be prepared to 
demonstrate the ability to perform medical acts as 
outlined in the written protocols upon request by 
members or agents of either Board. 

(c) Quality Improvement Process: 



(1) 



iH 



01 



The primary supervising phvsician and the nurse 
practitioner shall develop a process for the on-going 
review of the care provided m each practice site to 
include a written plan for evaluating the quality ot" 
care prov ided for one or more frequently encountered 
clinical problems. 

This plan shall include a description of the clinical 
problem(s). an evaluation of the current treatment 
interventions, and jt' needed, a plan for improving 
outcomes w ithin an identitled time-frame. 
The quality improvement process shall include 
scheduled meetings betv\een the primary supervising 
phvsician and the nurse practitioner at least every six 
months. Documentation for each meeting shall: 



IB) 
IC] 



identi1\ clinical problems discussed, including 

progress toward improving outcomes as stated 

in Subparagraph (c)(2) of thus Rule, and 

recommendations, if anv. for changes in 

treatment plan(s): 

be signed and dated by those who attended: 

and 



be available for review by members or agents 

of either Board for the previous five calendar 

years and be retained by both the nurse 

practitioner and phvsician. 

(d) Nurse Practitioner-Phvsician Consultation. The following 

requirements establish the minimum standards for consultation 

betv\een the nurse practitioner primary or back-up supervising 

physician(s): 

( 1 ) The nurse practitioner with temporary approval shall 
have: 

(A) review and countersigning of notations of 
medical acts by a primary or back-up 
superv ising phvsician v\ithin seven days of 
nurse practitioner-patient contact for the first 
six months of collaboration. This time-frame 
includes the period of interim status. 

(B) face-to-face consultation vsith the primary 
supervising phvsician on a weekly basis for 
one month after temporary approval is 
achieved and at least monthly throughout the 
period of temporary approval. 

(2) The nurse practitioner with first time approval to 
practice shall have: 

(A) review and countersigning of notations of 
medical acts by a primary or back-up 
supervising phvsician v\ithin seven davs of 
nurse practitioner-patient contact for the first 
six months of collaborative agreement. This 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



715 



PROPOSED RILES 



time-frame includes the period of interim 



status. 



(B) face-to-face consultation with the primar\ 
super\isinL! ph\sician on a weekK basis for 
one month after full appro\al js received and at 
least monthK for a period no less than the 
succeeding tl\e months. 

(3) The nurse practitioner pre\ iousK appro\ ed to practice 
in North Carolina who changes priman super\ isini; 
ph\sician shall ha\e face-to-face consultation w ith the 
primarx super\ isinij ph\ sician weekK for one month 
and then monthK for the succeedim; fi\e months. 

(4) Documentation of consultation shall: 

(A) identify clinical issues discussed and actions 
taken: 

(B) be signed and dated b^.- those who attended: and 

(C) be a\ailable for re\iew b\ members or agents 
of either Board for the pre\ious fi\e calendar 
\'ears and be retained by both the nurse 
practitioner and ph\sician. 

AiirhorinG.S. 90-6: 9U-W(14i: 90-1H.2: 90-1 ~ 1. 23(14). 

.0010 METHOD OF IDENTIFICATION 

The nurse practitioner shall wear an impropriate name tag 
spelling out the words "Nurse Practitioner Practitioner". 

Aiiihonn- G.S. 90-18(14). 

.0011 DISCIPLINARY .ACTION 

The appro\al of a nurse practitioner ma> be restricted, denied 
or terminated b> the Medical Board and the registered nurse 
license may be restricted, denied, or terminated b\ the Board of 
Nursing. Nur s ing Board, if. after due notice and hearing in 
accordance with pro\isions of Article 3A of G.S. 150B. the 
appropriate Board shall find one or more of the follow ing: 

( 1 ) that the nurse practitioner has held hims e lf 
himself herself out or permitted another to represent 
h+fft him her as a licensed ph\ sician: 

(2) that the nurse practitioner has engaged or attempted to 
engage in the performance of medical acts other than 
according to the written protocols and collaborati\e 
practice agreement: at th e dir e ction of or und e r th e 
Gup e r\ision of. a phy s ician lic e ns e d b\ the M e dical 
Board who is appro\ e d b\ the Board to b e that nurs e 
practition e r's sup e rx i s ing ph> sician: 

t^ that th e nurse practition e r has p e rform e d or att e mpt e d 
to p e rform m e dical act s not approved in th e s it e 
specific standing protocols or for which th e nurs e 
practition e r is not qualified b> education and training 
to p e rform. 

(?)f-)4 that the nurse practitioner has been con\ icted in an) 
court of a criminal offense: 

(4h-^4 that the nurse practitioner is adjudicated mentalK 
incompetent or that the nurse practitioner's mental or 
ph\sical condition renders the nurse practitioner 
unable to safeK function as a nurse practitioner: or 



i5jt4j that the nurse practitioner has failed to compK with 
an> of the provisions of this Subchapter. 

.Auihorin- G.S. 90-18(14): 90-1' 1.3'. 

.0012 FEES 

(a) .An application fee of one hundred dollars (SIOO.OO) shall 
be paid at the time of initial application for approval and each 
subsequent application for approval to practice. Th e on e 
hundr e d dollar ($100.00) All initial, subsequent and volunteer 
application -fee fees shall be equallv div ided betw een the Board 
of Nursing and the Medical Board. No other fees shall be 
shared. .Application fee shall be twenty dollars (S20.00) for the 
volunteer approval. 

(h) The fee for annual renev\al of approval, due Julv 1. shall 
betlft> dollars (S50.00). 

(c) The fee for annual renew, al of volunteer approval, due Juh 
1. shall be ten dollars iSl 0.00). 

idjfe) No portion of anv fee in this Rule shall be refundable. 

.Aiithorin- G.S. 90-6. 

.0015 PRACTICE DL RING A DISASTER 

A nurse practitioner approved to practice in thjs State or 
another state js authorized to perform medical acts, tasks, or 
functions as a nurse practitioner under the su pervision of a 
physician licensed to practice medicine in Nonh Carolina during 
a disaster within a count\ m which a state of disaster has been 
declared or counties contiguous to a county m which a state of 
disaster has been declared. The nurse practitioner shall notify 
the Boards jn writing of the names, practice locations and 
telephone numbers for the nurse practitioner and each primary 
superv ising phv sician within 15 davs of the first performance of 
medical acts, tasks, or functions as a nurse practitioner during 
the disaster. Teams of physician(s) and nurse practitioners I 
practicing pursuant to this Rule shall not be required to maintain 
on-site documentation describing superv ison arrangements and 
instructions for prescriptive authority as otherwise required 
pursuant to Rules .0008 and .0009 of this Subchapter. 

.Authonn G.S. 90-1 S( 13). (14): 90-18.2: 90-1'!. 20('): 90- 
r 1.23(b): 90-ri.42. 

SUBCHAPTER 320 - PH^ SICIAN ASSISTANT 
REGULATIONS 

.0001 DEFINITIONS 

Th e follov\ ing d e finition s appK to this Subchapt e r: 
f+-) "Board" m e ans th e North Carolina M e dical Board. 
{2^ "Physician .A ss i s tant" m e ans a person lic e ns e d bv and 
r e gist e red with th e Board to perform m e dical acts, 
tasks. — or functions — und e r th e — sup e rvision — of a 
physician lic e ns e d bv th e Board, who p e rforms tasks 
traditionally p e rform e d bv th e phv sician. and who has 
graduated from a phvsician assistant or surg e on 
assistant program accr e dited bv th e Commission on 
Accr e ditation of jMli e d H e alth Education Programs. 



7] 6 



NORTH C.AR0LIX4 REGISTER 



October 15. 1998 



13:8 



PROPOSED RULES 



or its pred e c e ssor or succ e ssor ag e nci e s. 
^ "Ph>'sician Assistant Lic e ns e " nr ^ ans th e docum e nt 
is s u e d by th e Board showing approva l — for th e 
ph\sician assistant to p e rfonn m e dica l act s , tasks, or 
functions und e r North Carolina law. 
(4) "Registering" m e ans paying the annua l f ee and 
providing th e infonnation r e qu e sted b\ th e Board as 
outlin e d in Rul e .0005 of this Subchapt e r. 
{§r) "Sup e rvising Physician" m e ans a physician who i s 
l i c e n s ed by th e Board and who is not prohibit e d by 
th e Board from sup e rv ising physician assi s tants. Th e 
phy si cian — HWi — s e rv e — as — a — primary — sup e rvi s ing 
ph\ sician or as a back up sup e rvising phv s ician . 
-fa) Th e "Primary Sup e rvising Ph\ sician" is th e 
phy si cian who. by signing th e application to 
th e Board, acc e pts full r es ponsibility for th e 
physician a s si s tant's m e dical activiti e s and 
prof e s s ional conduct at all tim e s, wheth e r th e 
phy s ician p e rsona l ly is providing sup e rvi s ion 
or th e s up e rvision is b ei ng pro\ id e d b\ a Back 

«p — Sup e rv i sing — Phvsician. The — Primar\ 

Sup e rvising — Physician — shaH — as s um e — tetal 
r e sponsibility ' for assuring the Board that the 
physician assistant is qualifi e d b\ e ducation 
and training to p e rform all m e d i cal acts 
requ i red of th e phvsician assistant and shall 
assume total r e sponsibi l ity for th e phy s ician 
assistant's performanc e in the particular field 
or fi e lds in which th e phvsician a s sistant i s 
e xp e ct e d to p e rfonn m e dical acts. 
Th e "Back up Sup e rvising Phvsician" m e an s 
th e phvsician who. by si^jning th e stat e m e nt 
r e quir e d in Rul e .0010 of this Subchapt e r, 
acc e pts th e r es pon s ib i lity for sup e rvi s ion of th e 
phv sician assistant's act i viti e s in the ab se nc e of 
th e Primary Sup e rvising Physician. The Back 
up Sup e rvising Phvsician is responsibl e for th e 
activiti e s of th e phvsic i an a s si s tant onlv wh e n 
providing sup e rvision. 



(^ 



^ 



accredit e d by th e Commission on Accr e ditation of 
All ie d H e alth Education Programs or its pr e decessor 
or s ucc e ssor ag e nci e s and: if l i censed in North 
Carolina — after — ivffie — \-. — 190 4 . — has — succ e ssful K 
compl e t e d a lic e nsing e xamination approv e d by the 
Board: 

(-H c e rtifi e s that he or sh e is mentally and physically abl e 

to e ngag e saf e lv in practic e a s a physician assistant: 

{^ has no lic e ns e , certificate, or registration a s a 

phv s ician — assistant — currently — und e r — disciplin e , 
r e vocation. — su s p e nsion — er — probation — fer — caus e 
r e sulting from th e appl i cant's practic e a s a physician 
as s i s tant: 

f6-) has aood moral charact e r: and 



f7^ submits to th e Board anv oth e r information th e Board 

d ee ms — n e c e s s ary — te — e valuate — the — applicant's 
qualifications. 

Authority G.S. 90-11: 90-1 S( 13): 90-1 H.l. 

.0003 TEMPORARY LICENSE 

Th e Board may grant a t e mporary license to an app l icant who 
m ee ts th e qualifications for a license e xc e pt that th e applicant 
has not v e t tak e n a Board approv e d c e rtily ing e xamination or th e 
applicant has tak e n a Board approv e d c e rtifi ing e xamination and 
is awaiting the results. A t e mporarv lic e ns e is valid: 

(-H for on e v e ar from th e dat e of issu e : or 

<-r-) until th e r es ults of an applicant's e xamination ar e 

availabl e : or 

f34 until th e Board m ee t s and consid e rs th e applicant's 

r e qu es t for a lic e ns e . — Th e Board mav e xt e nd a 
t e mporary lic e n se in th e e v e nt an applicant fails to 
pass th e c e rtifying e xam, upon a major i tv vot e of th e 
Board m e mb e rs, for a p e riod not to e xc ee d on e v e ar. 
This option is availab le to on l y thos e applicants who 
have m e t all oth e r crit e ria. Und e r no c i rcum s tances 
mav th e Board grant mor e than on e e xt e nsion of a 
t e mporal^ lic e ns e . 



m e an s ov e rs ee ing the activ iti e s of and Autharin- G.S. 90-18(1 3l: 90-18.1. 



supervising 

accepting the responsibilitv for. th e m e dical s e rvic e s 
r e nd e red by a phy s ician ass i stant. 



Authorin G.S. 90-181 1 3 1: 90-18.1. 

.0002 QUALIFICATIONS FOR LICENSE 

Exc e pt as otherwis e provid e d in this Subchapt e r, an individual 



.0004 INACTIVE LICENSE STATUS 

By notify ing th e Board in vsriting any physician assistant may 
e l e ct to place his or h e r lic e ns e on an inactive status. — A 
phvsician assistant with an inactiv e lic e ns e shall not practic e as 
a physician assi s tant. Anv phv s ician assistant who e ngag e s in 
practic e whil e h is or h e r lic e ns e is on inactiv e status shall b e 



shall obtain a licens e from th e Board b e for e th e individual mav consid e r e d to b e practicing without a lic e ns e , which shall b e 
practic e as a physician assi s tant. Th e Board mav grant a license grounds for disciplin e und e r G.S. 90 M (a) (7). A physician 

' ifl-be 



as a physician assistant to an applicant who has m e t all th e 
following crit e ria: 

f-H submits a completed application on forms provid e d by 

th e Board: 

(2) pavs th e fee e stablish e d by Rul e .0021(1) in this 

Subchapt e r: 

{?fj ha s succ e ssfully compl e t e d an e ducational program 

fer — physician — as s i s tant s — er — surg e on — assistants 



assistant r e qu e sting r e activation from i nact i v e status 
r e quir e d — te — pay — the — curr e nt — r e n e wal — fee; — te — provid e 
docum e ntat i on to th e Board v e rifying compl e t i on of continuing 
m e dical e ducation during th e pr e c e ding tv\ o > e ars as r e quir e d in 
Rul e .0006 of this Subchapt e r, and sha l l b e r e quired to m ee t th e 
crit e ria for r e n e wa l as sp e cifi e d in 21 NCAC 320 .0005. 



AulhnrlnG.S. 90-18(13): 90-18.1. 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



717 



PROPOSED RULES 



.0005 ANNUAL REGISTRATION 

Each person \sho holds a lic e ns e as a phxsician assistant in 



.0009 PRESCRIPTIVE AUTHORITY 

A phxsician assistant is authoriz e d to proscrib e , ord e r and 



tW 



state sha l l, upon notitlcation from th e Board, annuallx administer drugs and m e dical de\ic e s subj e ct to th e following 



r e gister th e licens e at such time as dir e ct e d b> th e Board b\ : 

fH s ubmitting th e f ee r e quir e d in Rul e .0021 of this 

Subchapt e r: 
^5-) compl e ting th e Board's registration form. 

AiithorinG.S. 90-15: 90-18(1 3 1: 90-1 8. 1. 

.0006 CONTINUING MEDICAL EDUCATION 

■Ifl — ord e r — te — maintain — phx s ician — a s si s tant — licensure. 
docum e ntation must b e ma i ntain e d b\ th e phxsician a sr .istant of 
100 h ours o f continuing medical e ducation (CME) compl e t e d for 
e \ e r\ X\\o \ e ar p e riod, at l e ast 4 hours of which must b e 
Am e rican i\cad e m\ of Physician .Xssistants Cat e gory 1 CME or 
th e e quixalent. — CME docum e ntation must b e a\ailabl e for 
in s p e ction b> th e Board or an ag e nt of th e Board upon r e qu e st. 

.\n> phx s ic i an assistant uho pr e scrib e s controll e d sub s tances 
s hall compl e t e at l e ast thr ee hours of CME e \ e r> two \ e ars on 
th e m e dical and social e ff e cts of th e misus e and abus e of 
alcohol, nicotin e . — pr e scription drugs (including controll e d 
substanc e s), and illicit drugs. 

Aurhorin- G.S. 90-18il3i: 90-1"^.!. 

.0007 EXEMPTION FROM LICENSE 

Nothing in this Subchapt e r shall b e constru e d to r e quir e 
lic e nsur e und e r 2 1 NC.AC 320 of: 

i-1-4 a phxsician assistant stud e nt enroll e d in a phxsician 

a s sistant or surg e on assistant educational program 
accr e dit e d b\ th e Commission on Accr e ditation of 
Alli e d H e alth Education Programs or its succ e ssor 
organizations: or 

^ a phxsician assistant e mplo\ e d in th e s e r\ic e of th e 

f e d e ral gox e mment \xhil e p e rforming duti e s incid e nt 
to that e mploxment: or 

(5-) ag e nts or e mplox ee s of phxsicians who p e rform 

d e l e gat e d tasks in th e offic e of a phxsician but who 
ar e not r e ndering s e rxic e s as a phxsician assistant or 
id e ntifung th e ms e lx e s as a phxsician assistant. 



Aurhorin- G.S. 90-18/13/: 90-18.1. 



conditions: 

f-H Th e phxsician a s sistant has b ee n assign e d a lic e ns e 

numb e r b> th e Board x\hich shall b e shoxxn on th e 
xsritten pr e scription. 

(3-) fte — phxsician — assi s tant — has rec e ixed — from th e 

s up e rxising — phxsician — written — instructions — fer 
pr es cribing drugs and a xvrirten policx for p e riodic 
r e xi e w bx th e phxsician of th e drugs pr e scrib e d. 

(^4 fn — ord e r to compound and disp e ns e drugs, th e 

Phxsician j\ssistant must obtain approxal from th e 
Board of Pharmacx an d must carrx out th e functions 
of compounding and disp e nsing in accordanc e xx ith 
21 NCAC 4 6 .1700. 

f+l In ord e r to pr e scrib e controlled substanc e s, th e 

primarx sup e rvising phxsician and th e phxsician 
assistant must sign th e stat e m e nt that th e x hav e r e ad 

and und e rstand t+w BfiA MID LEVEL 

PR.'\CT1T10NERS MANUAL and the information 
sh ee t prox id e d b> the Board. Th e Board also stronglx 
sugg e st s that th e phxsician and phxsician assistant 
continu e to updat e their knoxx l e dg e of th e indication s 
for th e s e substances and th e ir abus e pot e ntials. .Ml 
pr e scriptions — fer — substanc e s — fa l ling — within — the 
categori e s 2. 2N. 3 and 3N shall not e xc ee d a 
l e gitimat e s e x e n dax supplx. 

{%-) Th e phxsician assistant shall complx xxith other 

r e l e x-ant laxvs and r e gulations. 

f64 A pr e scription issu e d b> a phxsician assistant shall 

displax the nam e and t e lephone number oi the 
r e sponsibl e — sup e rxising — phxsicians — (primarx — er 
back up): th e nam e , practic e address, t e l e phon e 
number, and pr e scribing numb e r of the phxsician 
assistant, as w e ll a s all information r e quir e d bx lax\. 

{1^ Phxsician assistants max r e qu e st, r e c e ix e . and sign for 

prof e ssional sampl e s and max distribute professional 
sampl e s to pati e nts complying xvith appropriat e 
f e d e ral and state r e gulations. 



Authority G.S. 90-18(13): 90-18.1: 90-1' 1.23(14): 58 Fed Reg. 
3l.rii'l993) (to be codified at 2 1 C.F.R. 1301). 



.0008 SCOPE OF PRACTICE 

Phxsician assi s tants p e rfomi m e dical acts, tasks or functions 



.0010 SUPERVISION OF PH'^ SICIAN .ASSISTANTS 

.\ physician assistant max p e rform m e dical acts, tasks, or 



xvith phy.ician sup e rxision. Phxsician assistants p e rfomi those functions onix und e r th e sup e rx isi on of a phxsician. Sup e rxision 
duti e s and r es ponsibiliti e s. — including th e pr e scribing and shall b e continuous but. e xc e pt as othenxis e prox ided in th e s e 
di s pen s ing of drugs and m e dical d e xic e s. that are delegated bx rul e s, shall not b e constru e d as r e quiring th e phxsical pr ese nc e 

of th e s up e rxising phxsician at th e tim e and place that the 

s o rx ic e s ar e r e nd e r e d. 



th e ir sup e rxising phxsician! s). — Phx s ician as s istant s shall b e 
consid e r e d th e ag e nts of th e ir sup e rxising phxsicians in th e 
performanc e of all m e dical practic e r e lat e d actixiti e s. including 
but not limit e d to. the ordering of diagnostic, th e rap e utic and 
oth e r m e dical s e r < ices. 



Authority G.S. 90-18(13): 90-18.1. 



It is th e obligation of e ach t e am of ph>sician(s) and phxsician 
a s5 i s tant( s ) to e nsure that th e phxsician assistant's s cop e of 



id e ntified: that d e l e aat i 



jf m e dical task ' 



practic e 

appropriat e to th e skills of th e sup e rxising ph>sician(s) as xx e ll 
as th e phxsician as s istant's l e x e l of comp e t e nc e : that the 
r e lation s hip of. and acc e ss to. e ach superxi s ing phxsician i s 



718 



.\ORTH CAROLIXA REGISTER 



October 15. 1998 



13:8 



PROPOSED RULES 



d o Finod: and that a proc e ss for evaluation of th e physician 
assistant's perfonnanc e is e stablish e d. — A stat e m e nt cl e arly 



.0012 NOTIFICATION OF INTENT TO PRACTICE 

(a) Prior to the p e rformanc e of any medical acts, tasks, or 



describing th e s e supervisor}' arrang e m e nt s in a l l sett i ngs must be functions, a phy s ic i an assistant approv e d by th e Board sha l l 

signed b\ each s upervising phy s ician and the physic i an a s si s tant submit notification of such int e nt on fonns provid e d by th e 

and sha ll b e k e pt on ti le at all practice sit e s. — This stat e m e nt Board. Th e phy s ician assi s tant applicant may b e provi s ionally 

describing — sup e rvisor\' — arrangem e nts — artd — in s tructions — fer approv e d by th e Board's administrativ e staff to b e gin p e rforming 

pr e scriptiv e authority shall be ava i labl e upon r e qu e st by th e m e dical acts, tasks, and functions upon r e c e ipt of th e applicat i on 
Board or its r e pr e s e ntativ e s. 



The time int e rval betwe e n th e physician a s sistant's contact 
with th e pati e nt and the chart r e vi e w and countersigning b\ the 
sup e rvising phy s ician may b e a ma.ximum of seven days for 
outpat ie nt (clinic'offic e ) charts. Entri e s b\ a physician a s si s tant 
into pati e nt charts of inpati e nt s (hospital, long t e rm car e 
institutions) must comply with th e rul es and r e gulat i on s of the 
institution: but. at a minimum, th e i nitial work up and treatm e nt 
plan and th e discharg e summar>' must be countersigned by th e 
superv i sing ph\ si c i an within — s e v e n day s of th e tim e of 
gen e ration of th e s e not e s. — In th e acute inpatient s e tting, th e 
initial work up. ord e rs, and tr e atm e nt plan must b e signed and 
dat e d within two working davs. 



fonn in the Board's office subject to tlna l approval by th e Board. 
Such notification shall includ e : 

(4^ — the nam e , pract i c e addr e ss, and telephon e numb e r of 
th e physician assistant: and 

(34 th e nam e , practic e addr e ss, and t e l e phone number of 

th e primar\ sup e rvis i ng physician(s). 
(-b) — The physician assistant shall notil\' th e Board of any 
chang e s or additions in a pr e viously approv e d practice s e tting 
w i thin 1.^ days of th e occurr e nc e . 

fe) — Int e nt to pract i c e fonns mu s t b e submitted for e ach 
additional job und e r a n e w primary sup e rvising phy s ician. 



Aiithorin-G.S. 90-18(13): 90-18.1. 



.Aiahorin-G.S. 90-18(13): 90-18.1. 

.0011 SUPERVISING PHYSICIANS 

(a) A physician wi s hing to s e rve as a primarv' sup e rvising 
phvsician must: 

i4-) b e lic e ns e d to practic e m e dicin e by th e Board and not 

prohibited by th e Board from sup e rvising ph\ s ician 
assistant: 

{3r) not i fi th e Board of the physician's int e nt to s e rv e as a 

primary — supervising — physician — fef — a — physician 
assi s tant: and. 

{^ — submit a stat e m e nt to th e Board that th e physician will 
e x e rci se sup e rvi s ion ov e r th e physician assistant in 
accordanc e with any rul es adopt e d by th e Board and 
that th e physician will r e tain prof e ssional and l e gal 
r es ponsibility for th e car e r e nd e r e d by th e physician 
as s istant. 



.0013 SATELLITE SETTINGS 

Nothing contained in this Subchapt e r shall b e con s tru e d to 
prohibit th e r e nd e ring of s e rvic es by a physician assi s tant in a 
se tting g e ographically remote from the supervising phy s ician. 

.Authority G.S. 90-18(13): 90-18.1. 

.0014 EXCLUSIONS OF LIMITATIONS ON 
EMPLOYMENT 

Ne. :hing h e r e in sha l l b e constru e d to limit any lawful 
eff>f i oym e nt arrang e ment of a physician assistant approved 
und e r this Subchapt e r . 

.AiilhoritrG.S. 90-18(13): 90-18.1. 

.0015 ASSUMPTION OF PROFESSIONAL LIABILITY 

Th e sup e rvising physician( s ) shall b e r e sponsibl e for th e 



(b) A phy s ician wishing to s e rv e as a back up sup e rvising sup e rvision of th e physician as s istant's pati e nt car e activiti e s. 



i ncluding wh e n th e physician a s sistant provid es car e and 
treatm e nt for pati e nts who ar e in h e alth car e faciliti e s. 



physician must b e l i c e ns e d to practic e m e dicin e by the Board 

and not prohibit e d b> th e Board from s up e rvi s ing a phvsician 

as s i s tant and approv e d by th e pr i mary' sup e rv i sing phy s ician a s 

a p e rson w illing and qualifi e d to assume r e spon s ibilitv for th e .4uthorir\- G.S. 90-18(13): 90-18.1. 

car e r e nd e r e d by th e physician assistant in th e abs e nc e of th e 

priman, sup e rvising physician. An ongoing list of all approv e d 

back up sup e rvising ph\ sicians. signed and dat e d by e ach back 

up sup e rvising physician, th e primary sup e rvising physician, and accordanc e with provi s ions of Articl e 3 A of G.S. 150B. 



.0016 VIOLATIONS 

Th e Board ma\. following th e e x e rcis e of due proc e ss, in 



th e physician a s sistant, must be retained as part of th e disciplin e any phy s ic i an assistant who: 



insp e ctabl e s up e rvi s or} arrangements statement d es crib e d in 
Rule .0010 of this Subchapt e r. 

(c) It is the responsibility of th e supervising physician s to 
e nsure that th e physic i an as s istant has ad e quat e back up for any 
proc e dur e p e rform e d by th e physician as s i s tant, in any practic e 
location (oftlc e . hom e , hospita l , e tc.). 



Authorit\G.S. 90-18(13): 90-18.1. 



fl-) fraudul e ntiv or d e c e ptiv e ly obtains or attempts to 

obtain a lic e ns e : 

(34 fraudul e ntly or d e c e ptiv e ly u s es a license: 

(54 i s convict e d of a f e lony: 

(44 is an habitua l us e r of intoxicants or drugs to such an 

e xt e nt that th e phy s ician as s istant i s unabl e to saf e ly 

p e rfonn m e dical acts: 
(^4 ha s b ee n adjudicat e d as m e ntally incomp e t e nt or has 

a m e ntal condition that r e nd e r s th e physician a ss istant 



13:H 



NORTH CAROLINA REGISTER 



October 15, 1998 



719 



PROPOSED RULES 



unable to saf e ly p e rform medical acts; 

{^ has committ e d an act of m o ral turpitud e : 

f7^ r e pr e s e nts hims e lf or h e r se lf a s a physician; 



Phy s ician assistants approv e d und e r this Subchapt e r shall k ee p 
proof of curr e nt approval available for insp e ction at their 
primarv plac e of practic e and shall, wh e n e ngag e d in their 
f8^ any v i olation of the F e deral Controll e d Substanc e s prof e ss i onal activiti e s, w e ar a nam e tag id e ntifying th e ms e lv es 



law; or 

{^ lacks professional compet e nce to p e rform m e dical 

act s with a reasonabl e d e gre e of skill and safety for 
pati e nt s . In this con ne ctio n , t he Board may consid e r 
action of a physician a s si s tant indicating failur e to 
prop e rK — treat — a pati e nt — and — may — r e quir e — s«eh 
phys i cian — assistant — te — submit — te — inquiri e s — er 
e xam i nations, writt e n or ora l . b\ m e mb e r s of the 
Board or by oth e rs lic e ns e d to practic e in this State, a s 
the — Board — d ee m s — nec e s s aiA — te — d e t e nn i n e — the 
prof ess ional qualifications of such phvsician assistant. 

AiiihoniyG.S. 90-NiuitUi: 9()-lSil3): 9U-1H.I. 

.0017 DISCIPLINARY AUTHORITY 

Th e Board, upon finding that a phys i cian assistant has 
comm i tt e d — arrt — off e ns e d e scrib e d — ifi — Rtife — .0016 of thi s 
Subchapt e r. ma> aft e r d ue p ro c ess: 

f-H r e fus e to grant a l ic e n se : or 

(^-) r e vok e , susp e nd, l i mit, or oth e rwis e r e strict a lic e n se . 

Authority U.S. 9U-1-. 90-18(13): 90- lH. 1. 

.0018 LOCUM TENENS PERMIT 

Locum t e n e ns m e ans th e t e mporarv provision of s e rvic e s at a 
sp e cific sit e by a substitut e physician ass i s tant provider. The 
Board may grant a locum t e n e ns p e rm i t to any applicant who is 
approv e d by th e Stat e . — Th e p e nnit may b e grant e d b\ an 
authoriz e d r e pr e s e ntativ e of th e Board. Such application s for 
locum t e n e ns p e rmi ts shall b e r e vi e w e d at th e n e xt r e gLilarly 
sch e dul e d Board m ee t i ng. — Th e duration of a locum t e nens 
p e nnit sha l l b e finit e and shall not e xceed six months. 

Authority U.S. 90-1 Sf 13): 90-lH.l. 

.0019 TITLE AND PRACTICE PROTECTION 

fa-) — Any p e rson not approv e d under this Sub> ipl e r is in 
violation of G.S. 90 18 and is subject to p e nalties app l icabl e to 
th e unlic e n se d practic e of m e dicin e if h e or s h e : 

f-M ho l ds h i ms el f or h e rs e lf out a s a phy s ician a s si s tant; 

(3-) us e s any combination or abbr e viation of th e t e rm 

"physician ass i stant" to indicat e or impK that h e or 
sh e is a ph\sician assistant; or 

(^-) acts as a phy s ician as s i s tant without being approv e d 

by th e Board. 
(b) An unlicen se d phy s ician shall not be permitt e d to us e th e 
tit le of "physician as s istant" or to practic e as a physician 
assistant unl e s s h e or s he fulfills th e r e qu i r e m e nt s of this 
Subchapt e r. 



as a "phy s ician a s sistant." 

Authority G.S. 90-18(13): 90-lS.l. 

.0021 FEES 

Th e Board is e mpowered to charge th e following f ees : 
f+^ Physician Ass i stant Lic e ns e F ee on e hundr e d and 

fiftv do ll ars ($150.00). 
f=^ Annual — R e gistrat i on — Fee s e v e nty five — dollars 

($75.00). 

Authorities. 9()-lS(l3): 90-IS 1. 

SUBCHAPTER 32R - CONTINUING MEDICAL 
EDUCATION (CME) REQUIREMENTS 

.0001 CONTINUING MEDICAL EDUCATION (CME) 
REQUIRED 

(a) CME js defined as knowledge and skills generally 
recognized and accepted by the profession as within the basic 
medical sciences, the discipline of clinical medicine, and the 
provision of healthcare to the public. CME should maintain, 
develop, or improve the physician's knowledge, skills- 
professional performance and relationships w hich ph\ sicians use 
to provide services for their patients, their practice, the public, 
or the profession. 

(b) Each person licensed to practice medicine in the State of 
North Carolina shall complete no less than 50 hours of practice 
relevant CME annually m order to enhance current medical 
competence, performance or patient care outcome. 20 hours 
shall be in the phvsician-initiated category and 30 hours shall be 
in the educational provider-initiated category. General medical 
reading is not applicable to phvsician-initiated CME. 

Authority G.S 90-14(al( 15). 

.0002 APPROVED CATEGORIES OF CME 

(a) Phvsician-initiated CME: 
( 1 ) Practice based self-studv; 



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(10) 
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Colleague consultations; 

Office based outcomes research; 

Study initiated bv patient inquiries: 

Study of community health problems: 

Successful specialty board examination 

certification or recertification; 

Teaching (professional, patient/public health); 

Mentoring: 

Morbidity and Mortalits (M&M) conference: 

■loumal clubs; 



for 



Authority G.S. 90-18(13): 90-IS. 1. 



.0020 IDENTIFICATION REQUIREMENTS 



Creation of generic patient care pathy\ays and 

guidelines: 
( 12) Competency Assessment , 
(b) Educational Provider-Initiated CME: All education 



720 



NORTH CAROLINA REGISTER 



October 15, 1998 



13:8 



PROPOSED RULES 



offered by institutions or organizations accredited by the 
Accreditation Council for Continuing Medical Education 
(ACCME) and reciprocating organizations or American 
Osteopathic Association ( AOA). 

( 1) Formal Courses: 

(2) Scientific clinical presentations, or publications; 

(3) Enduring material (Audio-Video): 

(4) Skill development. 

Authorin- G.S. 90-14(0)115). 

.0003 EXCEPTIONS 

(a) A licensee currently enrolled in an AOA or Accreditation 
Council on Graduate Medical Education (ACGME) accredited 
graduate medical education program is exempt from the 
requirements of Rule .0001 of this Subchapter. 

(b) A licensee shall ha\e one \ear of e.xemption from the 
requirements of Rule .0001 of this Subchapter after having 
received initial licensure. 

Authorin- G.S. 9U-I4ta/(15j. 

.0004 REPORTING 

At tlie time of annual registration each Licensee shall report 
on the Board's annual registration form the number of hours of 
practice-relevant CME obtained in compliance with Rule .0001 
of this Subchapter. CME hours must be documented by 
categories for three consecutive \'ears and may be inspected by 
the Board or its agents. 

Authorin- G.S. 90-l4(a)( 15). 

SUBCHAPTER 32S - PHYSICIAN ASSISTANT 
REGULATIONS 

.0001 DEFINITIONS 

The following definitions appK to this Subchapter: 

( 1 ) "Board" means the North Carolina Medical Board. 

(2) "Physician Assistant" means a person licensed b\ and 
registered with the Board to perform medical acts, 
tasks, or functions under the supervision of a 
physician licensed by the Board, who performs tasks 
traditionally performed by the phy sician. and who has 
graduated from a physician assistant or surgeon 
assistant program accredited by thie Commission on 
Accreditation of Allied Health Education Programs. 
or its predecessor or successor agencies. 

(3) "Physician Assistant License" means the document 
issued by the Board showing approval for the 
physician assistant to perform medical acts, tasks, or 
functions under North Carolina law. 

(4) "Registering" means paying the annual fee and 
providing the information requested by the Board as 
outlined in Rule .0005 of this Subchapter. 

(5) "Supervising Physician" means a physician who is 
licensed by the Board and yvho is not prohibited by 
the Board ft-om supervising physician assistants. The 



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£8} 



physician may serve as a primary supervising 
physician or as a back-' ip supervising physician. 

(a) The "Primary Supervising Physician" is the 
physician yvho. by signing the application to 
the Board, accepts full responsibility for the 
physician assistant's medical activities and 
professional conduct at ail times, whether the 
physician personally is providing supervision 
or the supervision is being provided by a Back- 
up Supervising Physician. The Primary 
Supervising Physician shall assume total 
responsibility for assuring the Board that the 
physician assistant is qualified by education 
and training to perform all medical acts 
required of tlie physician assistant and shall 
assume total responsibility for the physician 
assistant's perfonnance in thie particular field 
or fields io y\hich the physician assistant is 
expected to perfonn medical acts. 

(b) The "Back-up Super\ising Physician" means 
the physician who, by signing the statement 
required rn Rule .0010 of this Subchapter, 
accepts the responsibility for supervision of the 
physician assistant's activities in thie absence of 
the Primary Supery ising Physician. The Back- 
up Supervising Phy sician is responsible for the 
activities of the physician assistant only when 
providing supervision. 

"Supervising" means overseeing the activities of. and 
accepting the responsibility for, the medical services 
rendered by a physiciar assistant. 
"Volunteer practice" rieans perfonnance of medical 
acts, tasks, or functions ysithout expectation of any 
form of payment or compensation. 
" Examination" means the Physician Assistant 
National Certil\ing Examination or another 
examination as approved by the Board. 



.Authority- G.S 90-18/13): 90-18. 1. 

.0002 QUALIFICATIONS FOR LICENSE 

Except as otherwise provided in this Subchapter, an individual 
shall obtain a license from the Board before the individual mav 
practice as a phy sician assistant. The Board may grant a license 
as a physician assistant to an applicant who has met aH the 
following criteria: 



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submits a completed application on forms provided by 

the Board: 

pays thie fee established by Rule .0021(1 ) in this 

Subchapter: 

has successfully completed an educational program 

for physician assistants or surgeon assistants 

accredited by tlie Commission on Accreditation of 

Allied Health Education Programs or its predecessor 

or successor agencies and: if licensed in North 

Carolina after June _L 19Q4. has successfully 

completed a licensing examination approved by the 



13:8 



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October 15, 1998 



721 



PROPOSED RULES 



Board: 

(4) certifies that he or she is mentall\ and ph\sicalK able 
to engage sat'eK in practice as a ph\sician assistant: 

(5) has no license, certitlcate. or registration as a 
phNsician assistant currentK under discipline- 
res ocation. suspension or probation for cause 
resulting from the applicant's practice as a ph\sician 
assistant: 

(6) has good moral character: and 

(7) submits to the Board an\ other information the Board 
deems necessar\ to e\aluate the applicant's 
qualifications: and 

(8) jf two \ears or more ha\e passed since graduation 
from an approv ed program, the applicant must submit 
documentation of the completion ot'at least 100 hours 
of continuing medication education (CME) during the 
preceding two \ears. 

Auihorin-G.S. 90-11: 90-1^1 13i: 90-18.1. 

.0003 TEMPORARY LICENSE 

(a) During the \ear prior to 2002. the Board ma\ grant a 
temporar\ license, \alid for a period not to exceed one \ ear, to 
an applicant who meet the qualifications for a license except that 
the appl'cant has not \et passed a licensing examination 
approNCG \ the Board. The Board shall not grant a temporarx 
license to an applicant who has t\\ ice failed a licensing 
examination approved tn the Board. 

(b| .\ temporary license becomes \oid at the time the Board 
grants the ph\sician assistant a fuH license or at the expiration 
date shown on the temporary license. 

(c) A temporan. license shall expire 30 da\s after the 
ph\sician assistant receives notice of non-passing scores on the 
second attempt of taking a licensing examination approved by 
the Board or at the expiration date of the temporary license, 
whichever is sooner. The licensee must notifx the Board w ithin 
15 davs upon the receipt of scores. 

AurhorlnG.S. 90-1 8(1 3i: 90-18.1. 

.0004 INACTIVE LICENSE STATUS 

By notifi, ing the Board in writing anv physician assistant may- 
elect to place his or her license on an inactive status. A 
physician assistant v\ith an inactive license shall not practice as 
a physician assistant. Any phv sician assistant who engages jn 
practice while his or her license js on inactive status shall be 
considered to be practicing without a license, which shall be 
grounds for discipline under G.S. 90- 14(a)(7). A physician 
assistant requesting reactivation from inactive status shall be 
required to pav the current renewal fee, to provide 
documentation to the Board veri1\ing completion of continuing 
medical education during the preceding ty\o vears as required in 
Rule .0006 of this Subchapter, and shall be required to meet the 
criteria for renewal as specified in 21 NCAC 32S .0005. 

AuthorinG.S. 90-18(13): 90-18.1. 



.0005 ANNUAL REGISTRATION 

Each person vsho holds a license as a physician assistant jn 
this state shall, upon notification from the Board, annually 
register the license at such time as directed by the Board by: 
( 1 ) completing the Board's registration form: and 

prov iding any other infonnation required by the 
Board: and 



12J 



submitting the fee required [n Rule .0017 of this 
Subchapter. 



AuthorinG.S. 90-15: 90-18(13): 90-18.1. 

.0006 CONTINUING MEDICAL EDUCATION 

jn order to maintain physician assistant licensure, 
documentation must be maintained by the phv sician assistant of 
100 hours of continuing medical education (CME) completed for 
every two year period, at least 40 hours of which must be 
American Academy of Phv sician .Assistants Category i CME or 
the equivalent. CME documentation must be available for 
inspection by the Board or an agent ot' the Board upon request. 

Anv physician assistant who prescribes controlled substances 
shall complete at least three hours of CME every two years on 
the medical and social effects of the misuse and abuse of 
alcohol, nicotine, prescription drugs (including controlled 
substances), and illicit drugs. 

AiiihorinG.S. 90-18(13): 90-18.1. 

.0007 E.XEMPTION FROM LICENSE 

Nothing in this Subchapter shall be construed to require 
licensure under 2 1 NCAC 32S of: 



( 1 ) a physician assistant student enrolled in a phv sician 
assistant or surgeon assistant educational program 
accredited by the Commission on .Accreditation of 
.Allied Health Education Programs or its successor 
organizations: or 

(2) a physician assistant employed in the service of the 
federal government while performing duties incident 
to that employment: or 

(3) agents or employees of phvsicians who perform 
delegated tasks rn the office of a phv sician but who 
are not rendering services as a phv sician assistant or 
identifying themselv es as a phv sician assistant. 

AuthorinG.S. 90-18(13): 90-18.1. 

.0008 SCOPE OF PRACTICE 

(a) Physician assistants perform medical acts, tasks or 
functions with physician supervision. Phvsician assistants 
perfomi those duties and responsibilities, including the 
prescribing and dispensing of drugs and medical devices, that are 
delegated bv their supervising phvsician(s). 

(b) Physician assistants shall be considered the agents of their 
supervising phvsicians in the performance of aj] medical 
practice-related activities, including but not limited to. the 
ordering of diagnostic, therapeutic and other medical services. 



722 



NORTH CAR0LIS.4. REGISTER 



October 15, 1998 



13:8 



PROPOSED RULES 



m 



14] 



\ 



Aiilhorin- G.S. 90-181 1 3): 90-18. 1. 

.0009 PRESCRIPTIVE AUTHORITY 

A ph\sician assistant js authorized to prescribe, order, 
procure, dispense and administer drugs and medical devices 
subject to the following conditions: 

( 1) The physician assistant and the supervising 
physician(s) shall acknowledge that each js familiar 
with the laws and rules regarding prescribing and 
shall agree to comply with these laws and rules by 
incorporating the laws and rules into the written 
prescribing instructions required for each approved 
practice site; and 

(2) The ph\sician assistant has received from the 
supervising physician written instructions for 
prescribing, ordering, and administering drugs and 
medical devices and a written policy for periodic 
review by the physician ot" these instructions and 
policN ; and 

in order to compound and dispense drugs, the 
ph\sician assistant must obtain approval from the 
Board of Pharmacy and must carry out the functions 
of compounding and dispensing b\ current Board of 
Pharmacy rules and an\ applicable federal guidelines: 
and 

in order to prescribe controlled substances, both the 
physician assistant and the supervising ph\ sician must 
have a valid PEA registration and the physician 
assistant shall prescribe in accordance with 
information provided by the Medical Board and the 
PEA. All prescriptions for substances falling within 
schedules IL UN. Ill, and IIIN. as defined in the 
federal Controlled Substances Act, shall not exceed a 
legitimate 30 da\ suppK : and 
Each prescription issued bv the ph\sician assistant 
shall contain, in addition to other information required 
by law, the following: 

(a) the physician assistant's name, practice 
address, telephone number: and 

(b) the physician's assistant's license number and. 
if applicable, the physician assistant's PEA 
number for controlled substances prescription; 
and 

(c) the responsible supervising physician's 
(primary or back-up) name and telephone 
number; and 

Pocumentation of each prescription must be noted on 

the patient's record and must include the folloyving 

infonnation: 

(a) medication name and dosage, amount 

prescribed, directions for use, number of 

refills; and 

physician 



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signature of physician assistant y\ith 

supervising physician's co-signature according 

to the site specific rule in 2 1 NC AC 32S .00 1 0. 

Physician Assistants who request, receive, and 

dispense professional medication samples to patients 



must comply yvith all applicable state and federal 
regulations. 

Aiilhorin- G.S. 90-18(13): 90-18.1: 90-171.23(14): 58 Fed. Reg. 
31.171(1993) (10 be codified at 21 C.F.R. 1301). 

.0010 SUPERVISION OF PHYSICIAN ASSISTANTS 

A physician assistant may perfonn medical acts, tasks, or 
functions only under the supervision of a physician. Supervision 
shall be continuous but, except as otherwise provided in these 
Rules, shall not be construed as requiring the physical presence 
of the supervising physician at the time and place that the 
services are rendered. 

il is the obligation of each team of physician(s) and physician 
assistant(s) to ensure that the physician assistant's scope of 
practice is identified; that delegation of medical tasks is 
appropriate to the skills of the supervising physician(s) as well 
as the physician assistant's level of competence; that the 
relationship of, and access to. each supervising physician is 
defined; and that a process for evaluation of the physician 
assistant's performance is established. A statement clearly 
describing these supervisoi"y arrangements in all settings must be 
signed bv each supervising physician and the physician assistant 
and shall be kept on file at aii practice sites. This statement 
describing supervisory arrangements and instructions for 
prescriptive authority shall be available upon request by the 
Board or its representatives. 

The time interval between the physician assistant's contact 
with the pati.nt and the chart review and countersigning by the 
supervising physician may be a maximum of seven days for 
outpatient (clinic/office) charts. Entries by a physician assistan ' 
into patient charts of in patients (hospital, long temi ca'e 
institutions) must comply with the rules and regulations of the 
institution; but, at a minimum, the initial yvork u p and treatment 
plan and the discharge summary must be countersigned by the 
supervising physician yvithin seven days of the time of 
generation ot' these notes, in the acute inpatient setting, the 
initial y\ork-up, orders, and treatment plan must be signed and 
dated yvithin tyvo yvorking days. 

Aiilhori!}- G.S. 90-18(13): 90-18.1. 

.0011 SUPERVISING PHYSICIANS 

(a) A physician wishing to serve as a primary supervising 
physician must: 

( 1 ) notify the Board of the physician's intent to serve as 
a primary supervising physician for a physician 
assistant; and 

(2) submit a statement to the Board that the physician is 
willing and qualified to exercise supervision of the 
physician assistant in accordance with rules adopted 
by the Board and that the physician will retain 
professional responsibility for the care rendered by 
the physician assistant within the scope of' the 
supervisory arrangements established pursuant to Rule 
.0010 of this Subchapter. 

(b) A physician wishin g to serve as a back-up supervising 



J3:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



723 



PROPOSED RULES 



physician must be licensed to practice medicine b^; the Board 
and not prohibited by the Board from supervising a ph\sician 
assistant and be approved b\ the primar\ supervising physician 
as a person willina and quahfied to assume responsibiHtv for the 
care rendered by the ph\sician assistant rn the absence of the 
priman. supervising; ph\sician. An on^oina list of aJJ approved 
back-up supervising ph\sicians. sianed and dated b\ each back- 
u p supervising physician, the primary supervisini; physician, and 
the physician assistant, must be retained as part of the 
inspectable supervisory arrangements statement described [n 
Rule .0010 of this Subchapter. 

tcj i! is the responsibility of the supervising physicians to 
ensure that the ph\sician assistant has adequate back-up for any 
procedure performed b\ the physician assistant in an\ practice 
location (office, home, hospital, etc.). 

AiilhorityG.S. 9()-IHil3): 9()-lS.L 

.0012 NOTIFICATION OF INTENT TO PRACTICE 

(a) Prior to the performance of an\ medical acts, tasks, or 
functions under the supervision of any primary supervising 
ph\sician. a ph\sician assistant licensed by the Board shall 
submit notification of such intent on forms pro\ided by the 
Board. The ph\sician assistant shall not commence practice 
until acknowledgment ot' the notification of intent to practice 
form ]s received from the Board. Such notification of intent to 
practice shall include: 

( 1 ) the name, practice addresses, and telephone number 
of the physician assistant; and 

(2) the name, practice addresses, and telephone number 
of the priman supervising ph\sician(s). 

(b) The ph\sician assistant shall notify the Board of anv 
changes or additions m a previousK approved practice setting 
within 15 days of the occurrence. 

AiithorinG.S. 90-l4ia)( 1 1 }: 90-1 Hi 13): 90-18.1. 

.0013 VIOLATIONS 

(a) The Board may deny, annul, suspend, or revoke the 
license, or other authorit\ to function as a ph\sician assistant in 
this State, of an\ person who has been found by the Board to 
have committed any of the following acts of misconduct or 
violations, or for an\ of the following reasons: 

( I ) Immoral, dishonorable, or unethical conduct; 

Failure to function in accordance with the rules of this 



Q 



I3j 



ill 



Subchapter or with the applicable laws of the State of 
North Carolina governing physician assistants; 
Making false statements or representations to the 
Board, or willfulK concealing from the Board 
material information in connection with an application 
for a license or notification of intent to practice as a 
physician assistant; 
Representing oneself as a physician; 
Being unable to function as a ph\ sician assistant w ith 
reasonable skill and safety to patients by reason of 
illness, drunkenness. e\cessi\e use of alcohol, drugs, 
chemicals, or any other type of material, or by reason 



of any physical or mental abnonnality. The Board 
ma\ require a licensed physician assistant to submit to 
a mental or physical examination by physicians 
designated by the Board before or after charges ma\ 
be presented against the physician assistant. The 
results ot" the examination shall be admissible jn 
evidence in a hearing before the Board; 

(6) Any departure from, or the failure to conform to. the 
standards of acceptable and preyailing medical 
practice, irrespective of whether or not a patient js 
injured thereby, or the committing of any act contrary 
to honesty, justice, or good morals, w hether the same 
is committed in the course of practice or otheryvise 
and yvhether committed yyjthin or yvithout North 
Carolina; 

(7) Conviction in any court of a crime involving moral 
turpitude, or tfie violation of a jaw involving the 
practice of medicine or practice as a physician 
assistant, or a conviction of a felony; 

(8) By false representations has obtained or attempted to 
obtain professional practice as a physician assistant, 
money, or anything of yalue; 

(9) Has advertised or publicly professed to treat human 
ailments under a system or school of treatment or 
practice other than that for y\hich the physician 
assistant has been educated; 

( 10) Adjudication of mental incompetency; 

(11) Lack of professional competence to practice as a 
physician assistant y\ith a reasonable degree ot" skill 
and safety for patients. The Board ma\. upon 
reasonable grounds, require a physician assistant to 
submit to inquiries or examinations, ysritten or oral, by 
members of the Board, physician assistants, or 
physicians licensed to practice medicine, as the Board 
deems necessary to determine the qualifications of 
such license; 

(12) Promotion of the sale of drugs, devices, appliances or 
goods for a patient, or proy iding sery ices to a patient. 
in such a manner as to exploit the patient and or the 
entity providin g compensation to the physician 
assistant or the employer of the physician assistant on 
behalf of the patient; 

(13) Having a license or other authority to practice as a 
phy sician assistant revoked, suspended, restricted, or 
acted against, or having a license denied by a 
licensing authority of an\ jurisdiction. For p ur poses 
of this Subchapter, any other licensing authority's 
acceptance of a license or other authority to practice 
which yvas voluntarily relinquished or surrendered by 
a physician assistant is considered an action against a 
license or the authority to practice as a physician 
assistant; 

( 14) The failure to respond, w ithin a reasonable period of 
time and in a reasonable manner, as determined by the 
Board, to inquiries from the Board concerning any 
matter affecting the license or practice of the 
physician assistant. 



724 



NORTH CAROLINA REGISTER 



October 15, 1998 



13:8 



PROPOSED RULES 



Authorin- G.S. 90-14: 90-14.2. 

.0014 DISCIPLINARY AUTHORITY 

(a) For any of the foregoing reasons, the Board may deny the 
issuance of a license to an applicant. ma\ re\oke a license issued 
to the ph\ sician assistant. ma\ suspend such a license for a 
period of time, and ma\ impose conditions upon the continued 
practice of the ph\ sician assistant. 

(b) The Board ma\ also, after such period of suspension as 
the Board ma\ deem advisable, limit the ph\sician assistant's 
practice w ith respect to the scope or location of his her practice. 
The Board ma\. [n its discretion and upon such terms and 
conditions and for such period of time as it may prescribe, 
restore a license so revolted or rescinded. 

(c) The Board shall refer to the North Carolina Academ\ of 
Ph\sician Assistants Health Committee all phxsician assistants 
whose health and effectiveness have been significantly i mpaired. 

.Authorin- G.S. 90-1 4la)t III: 90-18(13): 90-18.1. 

.0015 TITLE AND PRACTICE PROTECTION 

(a) Any person not approved under this Subchapter is in 
violation of G.S. 90-18 and is subject to penalties applicable to 
the unlicensed practice of medicine if he or she: 

( 1 ) falsely identities himself or herself as a physician 
assistant: 

(2) use any combination or abbreviation of the term 
"physician assistant" to indicate or imply that lie or 
she is a physician assistant: or 

(3) acts as a phv sician assistant without being approved 
by the Board. 

(b) An unlicensed physician shall not be permitted to use the 
title of "physician assistant" or to practice as a physician 
assistant unless tie or shie fulfills the requirements of this 
Subchapter 

.Authorin- G.S. 90-18(13): 90-18.1. 



G.S. 90-12. 1 or who submits a statement to the Board 
contlrming that the physician assistant is cun'entlv 
exclusively engaged in volunteer practice and has 
engaged exclusively in volunteer practice during the 
preceding y ear shall submit a reduced registration fee 
of twenty-five dollars ($25.00). 

.Authority G.S. 90-18(13): 90-18.1. 

.0018 PRACTICE DURING A DISASTER 

A phv sician assistant licensed in this State or in any other state 
is authorized to perform acts, tasks, or functions as a phv sician 
assistant under the superyision of a physician licensed to practice 
medicine in North Carolina during a disaster within a county in 
which a state of disaster has been declared or counties 
contiguous to a county in which a state of disaster has been 
declared (in accordance with G.S. 166A-4(3) or G.S. 166A-6). 
The physician assistant shall notify the Board in writing of the 
names, practice locations, and telephone numbers for the 
physician assistant and each primary supervising physician 
within 15 days ofthe tirst perfonnance of medical acts, tasks, or 
functions as a physician assistant during the disaster. A team of 
physician(s) and physician assistant(s) practicing pursuant to this 
Rule shall not be required to maintain on-site documentation 
describing supervisory arrangements and instructions for 
prescriptive authority as otherwise required in Rules .0009 and 
.0010 of this Subchapter. 

.Authority- G.S. 166.A-4(3): GS 166.4-6. 



CHAPTER 36 - BOARD OF NURSING 

Notice is hereby given in accordance -with G.S. 150B-21.2 
that the XC Board of Aursing intend.^ to antend rule cited 
as 21 NCAC 36 .0227. Notice of Rule-making Proceedings was 
published in the Register on September 2. 199~. 



.0016 IDENTIFICATION REQUIREMENTS 

A physician assistant licensed under this Subchapter shall 
keep proof of current licensure and registration available for 
inspection at the primary place of practice and shall, when 
engaged in professional activities, wear a name tag identilMng 
the licensee as a "physician assistant." 

.Authority G.S 90-18(13): 90-18.1. 

.0017 FEES 

The Board requires the foliov\ ing fees: 

( 1 ) Physician Assistant License Fee - one hundred and 
fifty dollars (SI 50.00). except that an applicant for a 
physician assistant limited volunteer license pursuant 
to G.S. 90-12.1 need not submit an application fee. 

(2) Annual Registration Fee ; seventy-five dollars 
(S75.00). except that any physician assistant who 
holds a limited volunteer license issued pursuant to 



Proposed Effective Date: May 1. 1999 

A Public Hearing will be conducted at 1 :00 p.m. on October 
30. 1998 at the North Carolina Medical Board. 1201 Front 
Street. Raleigh. NC.. 

Reason for Proposed Action: The Board of Nursing and North 
Carolina Medical Board are recommending that a change be 
made in the current rule to allow itiore flexibility in how 
pliysician supervision ofthe nurse practioner's peiformance of 
medical acts is implemetited and validated. We are also 
recommending changes in the requriements for first-time 
approval to practice as a nurse practitioner beginning January 
1. 2000. 

Comment Procedures: Comments regarding this action should 
be directed to Jean H. St an lev. ARA Coordinator, North 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



725 



PROPOSED RULES 



Carolina Di>urd of Niirsinii. PO Box 2129. Raleiii/i NC 2''602- 
2129. Comments must be received in the Board of Nursing 
office by 4:30 p.m. on November 16, 1998. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of slate or local government finds. These Rules do not 
have a substantial economic impact of at least five million 
dollars I S5. 1 100. 0(11) j in a 1 2-inonth period. 

SECTION .0200 - LICENSURE 

.0227 APPROVAL AND PRACTICE PARAMETERS 
FOR NURSE PRACTITIONERS 

(a) Definitions: 

( 1 ) "Medical Board" means the North Carolina Medical 
Board. 

(2) "Board of Nursing" means the Board of Nursing of 
the State of North Carolina. 

(3) "Joint Subcommittee" means the subcommittee 
composed of members of the Board of Nursing and 
Members of the Medical Board to whom 
responsibility is given by G.S. 90-6 and G. S. 90- 
171.23(b)( 14) to develop rules to govern the 
perfonnance of medical acts by nurse practitioners in 
North Carolina. 

(4) "Nurse Practitioner or NP" means a currentl> licensed 
registered nurse approved to perfonn medical acts 
who function s nt th e dir e ction of or und e r th e 
sup e rvision of under an agreement with a licensed 
physician for onuoina supervision, consultation, 
collaboration and e\aluation of the thos e medical aefe 
acts perfomied. Only a registered nurse approved by 
the Medical Board and the Board of Nursing may 
legalK' identify oneself as a Nurse Practitioner. It is 
understood that the nurse practitioner, by virtue of RN 
licensure, is independenth accountable for those 
nursing acts which he or she ma\ perform. 

(5) "Nurse Practitioner Applicant" means a registered 
nurse who ma\ function prior to full approval as a 
Nurse Practitioner in accordance with Part (c)(2)(D) 
of this Rule. 

(6) "Supervision" means the physician's function of 
overseeing medical acts performed b\ the nurse 
practitioner. 

(7) "Collaborati\e practice agreement" means the 
arrangement for nurse practitioner-phvsician 
continuous a\ailabilit> to each other for on-going 
supervision, consultation, collaboration, refen'al and 
evaluation of care pro\ided by the nurse practitioner. 

(8) f^ "Primary supervising Phvsician" means the 
licensed physician approved by the Medical Board 
who. by signing the nurse practitioner application, is 
held accountable for the on-going sup e rvision 
supervision. consultation. collaboration and 
evaluation of the medical acts perfomied b\ the nurse 
practitioner as defined in the site specific written 
protocols. 



(A) The primary supervising physician shall 
assume the responsibility of assuring the 
Boards that the nurse practitioner is qualified 
to perform those medical acts described in the 
site specific written protocols. 

(B) A physician m a graduate medical education 
program, whether fully licensed or holding 
onK a resident's training license, shall not be 
named as a primars supervising phvsician. 

(C) A phvsician in a graduate medical education 
program who is also practicing jn a non- 
training situation rnay supervise a nurse 
practitioner in the non-training situation if fulK 
licensed and approved to be a supervising 
physician by the Medical Board. 

(D) All physicians who may be a primary 
supervising physician ot" nurse practitioner! s) 
in any manner shall be approy ed in accordance 
w ith this Rule. 

(9) f8)"Back-up Supervising Physician" means the 
licensed physician who. by signing an agreement w ith 
the nurse practitioner and the primary supervising 
physician(s) shall be held accountable for the 
sup e rvising p e rformanc e supervision, consultation, 
collaboration and evaluation of medical acts by the 
nurse practitioner in accordance yvith the site specific 
written protocols y\hen the Primary Superyising 
Physician is not ay ailable. 

(A) The signed and dated agreements for each 
back-up supervising physician(s) shall be 
maintained at each practice site. 

(B) A physician jn a graduate medical education 
program, whether fully licensed or holding 
only a resident's training license, shall not be 
named as a back-up super\ ising phvsician. 

(C) A physician in a graduate medical education 
program yvho js also practicing ]n a non- 
training situation may be a back-up supervising 
physician to a nurse practitioner in the non- 
training situation jf fully licensed and has 
signed an agreement w ith the nurse practitioner 
and the priman. supervising physician. 

( 10) (^"Approval" means authorization by the Medical 
Board and the Board of Nursing for a registered nurse 
to practice as a nurse practitioner in accordance v\ ith 
this Subchapter. 

(11) f44)" Written s tanding protocols" means the signed 
and dated set of vsritten practice guidelines maintained 
at each practice site which describe the prescribing 
privileges, treatments, tests and procedures that define 
the scope of the nurse practitioner's medical acts in 
that setting. Clinical practice issues that are not 
covered by the written protocols require nurse 
practitioner ph\sician consultation. and 
documentation related to the treatment plan. 

(12) "Volunteer practice" means practice y\ithout 
expectation of compensation or payment (monetary. 



726 



NORTH CAROLINA REGISTER 



October 15, 1998 



13:8 



PROPOSED RULES 



im 



in kind or otherwise} to the nurse practitioner either 

directJN or indirectly. 

"Disaster" means a state of disaster as defined in 



(14) 



UIJ 



North Carolina G.S. 166A-4(3) and proclaimed b\ the 
Governor, or by the General Assembh pursuant to 
North Carolina G.S. 166A-6. 

"Interim Status" means the pri\ ilege that is given to a 
new graduate of an appro\ed nurse practitioner 
education program or a registered nurse seeking initial 
approval in North Carolina w ith limited pri\ileges. as 
detmed in Part (c)(2)(D> of thus Rule while awaiting 
final approval to practice as a nurse practitioner. 
"Temporar\ Approval" means authorization by the 
Medical Board and the Board ot~ Nursing for a 
registered nurse to practice as a nurse practitioner in 
accordance with this Rule for a period not to exceed 
18 months while awaiting notification of successful 
completion of the national certification e.\amination. 

(b) Scope of Practice. The nurse practitioner shall be 
responsible and accountable for the continuous and 
comprehensive management of a broad range of personal health 
services for which the nurse practitioner shall be educationally 
prepared and for which competenc\ has been maintained, w ith 
ph\sician supervision and collaboration as described in 
Paragraph (i) of this Rule. These services include but are not 
restricted to: 

( 1 ) promotion and maintenance of health; 

(2) prevention of illness and disabilitv': 
diagnosing, treating and managing acute and chronic 
illnesses; 

guidance and counseling for both individuals and 
families; 

prescribing, administering and dispensing therapeutic 
measures, tests, procedures and drugs: 
planning for situations be\ond the nurse practitioner's 
expertise, and consulting w ith and referring to other 
health care providers as appropriate; and 
evaluating health outcomes. 

(c) Nurse Practitioner Approval. 
(I) Qualifications for nurse practitioner approval. A 

registered nurse shall be approved b> the Medical 
Board and the Board of Nursing Board before the 
individual applicant mav practice as a nurse 
practitioner. The Boards ma\ grant approval to 
practice as a nurse practitioner to an ind i vidual 
applicant who: 

(A) is currently licensed as a registered nurse by 
the Board of Nursing; 

(B) has successfully completed an approved 
educational program as outlined in Paragraph 
(d) of this Rule; on as of January _L 2000. 
meets the certification requirements set forth 
Subparagraph (d)(3) of this Rule. 

(C) has an unrestricted license to practice as a 
registered nurse and. if applicable, an 
unrestricted approval to practice as a nurse 
practitioner unless the Boards consider such 



(3) 
(4) 
(5) 
(6) 

(7) 



condition and agree to approval; 

(D) submits any information deemed necessarv' to 
evaluate the application; 

(E) has a collaborative practice agreement with a 
priman. supervising physician — agr ee m e nt; 
physician; and 

(F) pays the appropriate fee. 

(2) Application for nurse practitioner approval. 

(A) Application for nurse practitioner approval 
shall be made upon the appropriate forms and 
shall be submitted Jointlv by the nurse 
practitioner and primary supervising 
physician(s). 

(B) Applications for first-time approval in North 
Carolina shall be submitted to the Board of 
Nursing Board and then proc e ss e d approved bv 
both Boards as follows; 

(i) the Board of Nursing Board will veritv' 

compliance with Parts (c)( 1 )(A) - (D) of 

this Rule; 
(ii) the Medical Board vsill verily' 

compliance with Parts (c)( 1 )(D) - (F) of 

this Rule; and 
(iii) the appropriate Board will notify 

applicant of final approval status. 

(C) Applications for approval of changes in 
practice arrangements for a nurse practitioner 
currently approved to practice in North 
Carolina: 

(i) addition or change of primary 
supervising physician shall be submitted 
to the Medical Board; 

(ii) request for change(s) in the scope of 
practice shall be submitted to the 
Nursing Board; Joint Subcommittee; 
and 

(iii) the appropriate Board will notify 
applicant of final approval status. 

(D) Interim status for nurse practitioner applicant 
mavbe granted as follows: 

(i) a registered nurse who is a new graduate 
of an approved nurse practitioner 
educational program as set forth in 
Paragraph (d) of this Rule; or 

(ii) a registered nurse seeking first time 
approval to practice as a nurse 
practitioner in North Carolina who has 
worked previously as a nurse 
practitioner in another state and who 
meets the nurse practitioner educational 
requirement as set forth in Paragraph (d) 
of this Rule; and 

(iii) the Boards Nursing Board has have 
issued interim approval v\ith the 
following limitations: 
(1) no prescribing privileges; 
(II) primary or back-up physicians 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



727 



PROPOSED RULES 



LlliJ 



ph\ s ician — on sit e shall be 
continuousK a\ailable for 
appropriate ongoing super\ ision. 
r e \ i e w consultation- 

collaboration and countersigning 
of notations of medical acts in all 
patient charts within 2 4 hours 
two working daNS of nurse 
practitioner applicant-patient 
contact: aftd 

face-to-face consultation w ith the 
primary super\ising ph\sician 
shall be weekK with 
documentation of consultation 
consistent with Part (i)(4)(D) of 
this Rule: and 

ffH-> ma_\ not exceed period of six 
months. 
Januan. 1. 2000. first time 



(IV) 

(E) BeeinninL _ 

applicants who meet the qualifications for 
appro\al. but are awaiting certitlcation from a 
national credentialing bod\ approved bn the 
Board of Nursing. ma\ be granted a temporarN" 
approval to practice as a nurse practitioner. 
Temporan approval is \alid for a period not to 
exceed 18 months from the date temporary 
approval ]s granted or until the results of the 
applicant's certification examination are 
available, whichever comes tlrst. 

(F) ft) The registered nurse who v\as previousK 
approved to practice as a nurse practitioner in 
this state shall: 

(i) meet the nurse practitioner approval 

requirements as stipulated in Parts 

(c)(l)(.^). (C) -(F) of this Paragraph; 

(ii) complete the appropriate application; 

(iii) receive notification of approval from the 

appropriate Board. Board: and 
(iv) meet the consultation requirements as 
outlined m Parts (i)|4)(C) : iDj ot' this 
Rule. 
(G) fF) If for any reason a nurse practitioner 
discontinues working m within the approved 
sup e r\i5ion — ph\sician(5) nurse practitioner- 
supervising ph\sician(s) arrangement, the 
Boards shall be notified in v\riting and the 
nurse practitioner's approval shall 
automaticalK terminate or be placed on an 
inactive status until such time as a new- 
application is approved in accordance w ith this 
Subchapter. Special consideration mav be 
given in an emergency situation. 
(H) Volunteer .Approval for Nurse Practitioners. 
The Boards mav grant approval to practice in a 
volunteer capacity to a nurse practitioner who 
has met the qualifications as outlined jn Parts 



(c)( IX A) - (F) and (2)(A) - (G) of this Rule. 
(d) Requirements for Approval of Nurse Practitioner 
Educational Programs. 

(1) The Joint Subcommittee shall establish the 
requirements for approval of nurse practitioner 
education programs. 

(2) .\ nurse practitioner applicant who completed a nurse 
practitioner educational program prior to December 
3 1. 1999 shall provide to the Board of Nursing 
evidence of successful completion of a course of 
formal education which contains a core curriculum 
including 400 contact hours of didactic education and 
400 contact hours of preceptorship or supervised 
clinical experience. 

(A) The core curriculum shall contain as a 
minimum the follow ing components: 

(i) health assessment and diagnostic 
reasoning including: 
(1) historical data: 
(11) phv sical examination data; 
(111) organization of data base; 
(ii) phamiacology : 
(iii) pathophysiology; 
(iy ) clinical management of common health 
care problems and diseases related to: 
(!) respiratory system; 
(11) cardiovascular system; 

(III) gastrointestinal system; 

(IV) genitourinary svstem; 
(V) integumentary system; 

(VI) hematologic and immune 

systems: 
(Vll) endocrine system; 
(Vlll) musculoskeletal svstem: 
(IX) infectious diseases; 
(X) neryous system; 
(XI) behavioral, mental health and 
substance abuse problems: 
(y) clinical preventative services including 
health promotion and prevention of 
disease; 
(vi) client education related to Part s 

(b)(1)(D) m4 (-E^ Subparts 

(d)(2)(.A)(iv) and (v) of this Rule: and 
(vii) role development including legal, 
ethical, economical, health policy and 
interdisciplinary collaboration issues. 

(B) Nurse practitioner applicants v\ho mav be 
exempt from components of the core 
curriculum requirements listed in Subparagraph 
(fe)(44 Part (d)(2)(A) of this Rule are: 

(i) Any nurse practitioner approved in 
North Carolina prior to January 18. 
1981, is permanently exempt from the 
core curriculum requirement, 
(ii) A nurse practitioner certified bv a 
national credentialing bodv approved b> 



728 



\ORTH CAROLISA REGISTER 



October 15. 1998 



13:8 



PROPOSED RULES 



► 



► 



the Nursing Board who also provides 
evidence of satisfying Subparts 
(b)(1)(A) (C) (d)(2)(A)(i) -(iii)ofthis 
Rule shall be exempt from core 
curriculum requirements in Subparts 
(b)(1)(D) (G) (d)(2)(A)(iv) : (vn) of 
this Rule. Evidence of satisfSing 
Subparts (b)(1)(A) (C) (d)(2)(A)(i) -_ 
(iii) of this Rule shall include, but may 
not be limited to: 

(1) a narrative of course content; and 

(II) contact hours. 

(iii) A nurse practitioner seeking initial 

approval after January 1 , 1998 shall be 

exempt from the core cuiriculum 

requirements if certified as a nurse 

practitioner m hisher specialty by a 

national credentialine bod\ approved by 

the Board of Nursing as set forth in Part 

(d)(2)(A) ot" this Rule and when initial 

certification was obtained after January 

1. 1998. 

(iv) {m)\ nurse practitioner applicant. 

whose formal education does not meet 

all of the stipulations in Subparagraph 

(d)(2) of this Rule, may appeal to the 

Board of Nursing Joint Subcommittee 

on the basis of other education and 

experience. 

(3) Instead of educational program approval, all nurse 

practitioner r eplicants who are applying for or have 

received, fi.'st time approval to practice as a nurse 

practitioner on or after January _L 2000 shall be 

certified by a national credentialing body approved by 

the Board of Nursing or be ay\aiting initial 

certification by a national credentialing body 

approved bv the Board of Nursing for a period not to 

exceed 18 months from date temporary approval is 

granted. 

(e) Annual Renewal. 

(1) Each registered nurse yvho is approved as a nurse 
practitioner in this state will, upon notification from 
the Medical Board, annually' reneyv said approval by: 

(A) Verifying current RN licensure; 

(B) Submitting the fee required in Paragraph (I) of 
this Rule; and 

(C) Completing the renewal form. 

(2) For the nurse practitioner w ho had first time approval 
to practice after January K 2000. provide evidence of 
certification or recertification by a national 
credentialing body approved by the Board of Nursing. 

(3) (3-) If the nurse practitioner has not renewed w ithin 30 
days of renewal date, set by the Medical Board, the 
approval to practice as a nurse practitioner will lapse. 

(0 Continuing Education (CE). In order to maintain nurse 
practitioner approval to practice beginning no sooner than tyvo 
years after initial approval has been granted the nurse 



practitioner shall earn 30 hours of continuing education every 
two years. At least three hours of continuing education every 
tyvo years shall be the study of the medical and social effects of 
substance abuse including abuse of prescription drugs, 
controlled substances, and illicit drugs. Continuing Education 
hours are those hours for which approval has been granted by 
the American Nurses Credentialing Center (ANCC) or 
Accreditation Council on Continuing Medical Education 
(ACCME) or other national credentialing bodies approved by 
the Board of Nursing and consist e nt v\ i th Subpart (d)(2)(B)(i i ) 
of this Rul e . Nursing. Documentation shall be maintained b) the 
nurse practitioner at each practice site and made available upon 
request to either Board. 
(g) Inactive Status. 

( 1 ) An) nurse practitioner yvho wishes to place his or her 
approval on an inactive status may notify the Boards 
by completing the form supplied by the Boards; 

(2) The registered nurse with inactive nurse practitioner 
status shall not practice as a nurse practitioner; 

(3) The registered nurse y\ ith inactive nurse practitioner 
status who reapplies for approval to practice shall be 
required to meet the qualifications for approval as 
stipulated in Parts (c)( 1 )(A). (c)( 1 )(C) -^ (FJ and 
Part (c)(2)(A) of this Rule. 

(h) Prescribing Authorify. 

( 1 ) the prescribing stipulations contained in this 
Paragraph apply to writing prescriptions and ordering 
the administration of medications; 

(2 ) Prescribing and dispensing stipulations are as follows: 

(A) Drugs and devices that may be prescribed by 
the nurse practitioner in each practice site shall 
be included in the yvritten stand i ng protocols as 
outlined in Paragraph (i). Subparagraph (2) of 
this Rule. 

(B) Controlled Substances (Schedules 2. 2N. 3. 
3N. 4. 5) defined by the State and Federal 
Controlled Substances Acts may be procured. 
prescribed or ordered as established in written 
standing protocols, providing all of the 
follow ing restrict i ons requirements are met: 

(i) the nurse practitioner has an assigned 
DEA number which is entered on each 
prescription for a controlled substance; 

(ii) dosage units for schedules 2. 2N. 3 and 
3N are limited to a one w ee k's supply, 

e xc e pt D e xtroamphetamin e , 

M e th\lph e nidat e and P e mol i n e for th e 
tr e atm e nt of Att e ntion D e ficit Disord e r 
(ADD) or Att e ntion D e ficit Disord e r 
with Hyp e ractivity (ADHD) wh i ch ar e 
limit e d to a 30 day supply; and 

(iii) the prescription or order for schedules 2, 
2N. 3 and 3N may not be refilled. 

(C ) The nurse practitioner may prescribe a drug not 
included in the site-specific yvritten standing 
protocols only as follows: 

(I) upon a specific written or verbal order 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



729 



PROPOSED RULES 



obtained from t h e sup e rvising a primary 
or back-up supervisini^ ph\ sician before 
the prescription or order is issued b\ the 
nurse practitioner; and 
(ii) the verbal or written order as described 
in Subpart (h)(2)(C)(i) of this Rule shall 
be entered into the patient record arni 
s ign e d by th e nurs e prnct i t i oner with a 
notation that it is issued on the specific 
order of th e supervising a primar\ or 
back-up supervising ph\sician and 
siuned by the nurse practitioner and the 
physician. 

(D) Refills may be issued for a period not to exceed 
one \ ear except for schedules 2. 2N. 3 and 3N 
controlled substances which ma_\ not be 
refilled. 

(E) Each prescription shall be noted on the 
patient's chart and include the following 
information: 

(i) medication and dosage; 
(ii) amount prescribed; 
(iii) directions for use; 
(iv) number of refills; and 

(v) signature of nurse practitioner. 

(F) The prescribing number assigned by the 
Medical Board to the nurse practitioner shall 
appear on all prescriptions issued by the nurse 
practitioner. 

(G) Prescription Format: 

(i) all prescriptions issued b\' the nurse 

practitioner shall contain the super\ ising 

physician{s) name, the name of the 

patient, and the nurse practitioner's 

name, telephone number, and 

prescribing number; 

(ii) the nurse practition e r practitioner's 

assigned DEA number shall be written 

on the prescription fomi w hen a 

controlled substance is prescribed as 

defined in Paragraph (h) Part (B) of this 

Rule; and 

(3) The nurse practitioner ma\ obtain approval to 

dispense the drugs and de\ ices included in the written 

standing protocols for each practice site from the 

Board of Phamiac>, and s hall carry th e function of 

disp e nsing dispense in accordance v\ ith 2 1 NCAC 46 

. 1 700, which is hereby incorporated by reference 

including subsequent amendments of the referenced 

materials. 

(i) Physician Sup e rv i sion. Sup e rvision shall be provided by 

th e approved physician(s) as follows: 

(4-) Availabilit\: 

(-A) Vfte sup e rvising ph)' s ician sheH be 



{&) The sup e rvising physician shall be r e adi l y 

avai l abl e — fw — con s ultation — er — r e ferrals — ef 
pati e nt s from the nurse practitioner; and 

{Q^ If the nurs e practition e r i s to p e rform duties at 

a sit e awa\ from th e sup e rvising physician, the 

app l ication sha+1 cl e arK sp e cify the 

circum s tanc e s attd the sup e rvisory 

arrang e m e nts. 
(5^ Written Standing Protoco l s: 



a>- 



fA-) Written — standing protocol s — approved — artd 

sign e d by both th e sup e rvising physician(s) and 
th e nurs e practition e r sha l l b e maintain e d in 
e ach practic e s i t e ; 

ffr) Th e wr i tt e n standing protocols shall incl u d e th e 

d ru g s, d e vic e s, m e dical tr e atm e nts, t e sts attd 
proc e dur es that ma\ b e pr e scribed, ord e r e d and 
i mp le m e nt e d — by — the — nurse practition e r 
consist e nt with Paragraph (h) of this Rul e , and 
wh i ch ar e appropriat e for th e diagnosis and 
tr e atm e nt of th e most commonl) e ncount e r e d 
h e alth probl e m s in that practic e s e tting; 

fG) Th e writt e n standing protocols shall i n clud e a 

pr e d e t e miin e d plan for e m e rg e nc\ services; 

(©^ — Th e wr i tt e n standing protocol s shall sp e cify th e 
proc e ss b> which th e nurs e practitioner shall 
r e f e r a pati e nt to a physician other than an 
approv e d s up e rvising phys i c i an; and 

fE^ Th e nurs e practition e r sha l l b e pr e par e d to 

demon s trat e upon r e qu e st to a m e mb e r of 
e ith e r th e Board of Nursing or th e M e dical 
Board, or an ag e nt, th e ability to perform 
m e dical acts as outlin e d in th e sit e sp e cific 
writt e n s tanding protocols. 

Count e rsigning of M e dical Acts: 



contmuou sl v 



availabl e 



401- 



dir e ct 



commun i cat i on b\ radio, t e l e pho ne , er 



t e l e communications; 



(A3 Th e maximum tim e int e rval b e tween th e nur se 

practit i on e r's contact with th e pati e nt and 
m e dical r e cord r e vi e w and count e rsigning of 
m e dical act s b\ th e sup e rvising physician is 
s e v e n days for outpati e nt (clinic/offic e ) nurs e 
practition e r patient contacts. 

(B^ The — time — int e rval — er — countersigning — ef 

notations of m e dical act s in th e m e dical r e cords 
ef inpati e nts — (hosp i tal, — long term — eafe 
institution s) b\ th e sup e rvis i ng physician s hal l 

comply with the rttte and 

r e gulations — of — the — institution, — btrt — at — a 
m i nimum: 

-M) — th e initial workup, m e dical ord e rs and 
tr e atm e nt plan, shall b e cou n t e rs i gn e d 
within s e v e n days of th e tim e of 

th e nurs e practition e r pati e nt contact; 

nfiO 

fit) — in the acute inpatient se tting, th e initial 
work up, m e dical ord e rs and tr e atm e nt 
piftfi s ha l l b e count e rs i gned and 

dat e d w ithin two working davs of th e 
nur se practition e r pati e nt contact. 



730 



NORTH CAROLINA REGISTER 



October 15, 1998 



13:8 



PROPOSED RULES 



> 



> 



{G^ flw — (WW — i nterval — beU^ ee n — fhe — nurs e 

practition e r patient contact and count e rsigning 
by th e supervising physician of th e nurs e 
practition e r's notations of m e dical acts in th e 
m e dical r e cords — ef — pati e nts — ifi — sp e cial 
community ba se d — car e programs, such as 
d i alysis and hospic e , shall compK with th e 
rul e s and r e gulations of th e s p e cific car e 
program. 

(4) Supervising Physician s : 

{-A-) A phy s ician in a graduat e m e dical e ducation 

program, wh e th e r fully lic e n se d or ho l ding 
onK a r e sid e nt's training lic e nse, cannot b e 
nam e d as a sup e rvi s ing physician. 

fB-) A physician in a graduate m e dical e ducation 

program uho is also practicing in a non 
training — situation — may — sup e rvis e — a — nurs e 
practition e r in the non training s ituation if ful l y 
lic e ns e d and approved to sup e rvis e by th e 
Medical Board. 
tij Quality Assurance standards for a Collaborative Practice 
Agreement. 

( I ) Availability: The primar\ or back-up supervisint; 
ph\sician(s) and the nurse practitioner shall be 
continuously available to each other for consultation 
b\ direct communication or telecommunication. 
(2j Written Protocols: 

(A) Written protocols shall be agreed upon and 
signed by both the primary supervising 
physician and the nurse practitioner, and 
maintained in each practice site. 

(B) Written protocols shall be revie'.ed at least 
yearly, and this revievs shall be acknovv ledged 
bv a dated signature sheet, signed by both the 
primary supervising physician and the nurse 
practitioner, appended to the v\ritten protocol 
and available for inspection by members or 
agents of either board. 

(C) The written protocols shall include the drugs. 
devices, medical treatment, tests and 
procedures that mav be prescribed, ordered and 
implemented by the nurse practitioner 
consistent with Paragraph (h) of this Rule, and 
which are appropriate for the diagnosis and 
treatment of the most commonly encountered 
health problems in that practice setting. 

(D) The written protocols shall include a pre- 
determined plan for emergency services. 

(E) The nurse practitioner shall be prepared to 
demonstrate the ability to perform medical acts 
as outlined in the written protocols upon 
request by members or agents of either Board. 

(3) Quality Improvement Process. 

(A) The primary supervising physician and the 
nurse practitioner shall develop a process for 
the on-going review of the care provided in 
each practice site to include a written plan for 



evaluating the quality of care provided for one 
or more frequently encountered clinical 
problems: and 

(B) This plan shall include a description of the 
clinical problem(s), an evaluation of the current 
treatment interventions, and if needed, a plan 
for improving outcomes within an identified 
time-frame. 

(C) The qualin improvement process shall include 
scheduled meetings betvseen the primary 
supervising physician and the nurse 
practitioner at least every six months. 
Documentation for each meeting shall: 

(i) identify clinical problems discussed, 
including pro gress toward improving 
outcomes as stated in Part (i)(3)(B) 
of this Rule, and recommendations, if 
any, for changes in treatment plan(s): 
be signed and dated by those who 
attended; and 



iiil 
(iii) 



be available for review by members or 

agents of either Board for the previous 

five calendar years and be 

retained by both the nurse practitioner 

and physician. 

(4) Nurse Practitioner-Physician Consultation. The 

following requirements establish the minimum 

standards for consultation between the nurse 

practitioner primary or back-up supervising 

physician(s): 

(A) The nurse practitioner w ith temporary approval 
shall have: 

(i) review and countersigning of notations 
of medical acts bv a primary or back-up 
superv ising phy sician w ithin seven dav s 
of nurse practitioner-patient contact for 
the first six months of collaborative 
agreement. This time-frame includes the 
period of interim status. 

(ii) face-to-face consultation vsith the 
primary supervising physician on a 
weekly basis for one month after 
temporary approval is achieved and at 
least monthly throughout the period of 
temporary approval. 

(B) The nurse practitioner with first time approval 
to practice shall have: 

(i) review and countersigning of notations 
of medical acts by a primary or back-up 
superv ising physician \y ithin seven days 
of nurse practitioner-patient contact for 
the first six months of collaborative 
agreement. This time-frame includes 
the period of interim status. 

(ii) face-to-face consultation with the 
primary supervising physician on a 
vveeklv basis for one month after full 



13:8 



NORTH CAROLINA REGISTER 



October 15. 1998 



731 



PROPOSED RULES 



approval is received and at least monthly 
for a period no less than the succeedine 
five months. 

(C) The nurse practitioner previousK approved to 
practice in North Carohna who changes 
priman supervising ph\sician shall have face- 
to-face consultation with the primary 
su pervising ph\sician weekly for one month 
and then monthly for the succeeding five 
months. 

(D) Documentation of consultation shall: 



ID 

Liii 

(iii) 



identilA clinical issues discussed and 
actions taken: 

be signed and dated by those who 
attended: and 

be available for review by members or 

agents of either Board for the previous 

t1ve calendar vears and be retained bv 

both the nurse practitioner and 

physician. 

(j) Method of Identification. The nurse practitioner shall 

wear an appropriate name tag spelling out the words "Nurse 

Practitioner." 

(k) Disciplinary Action. The approval of a nurse practitioner 
may be restricted, denied or terminated bv the Medical Board 
and the registered nurse license mav be restricted, denied, or 
tenninated bv the Board of Nursing. Nursing Board, if after due 
notice and hearing in accordance with prov isions of Article 3 A 
or G.S. 150B. the appropriate Board shall find one or more of 
the following: 

( 1 ) that the nurse practitioner has held himself or herself 
out or permitted another to represent the nurse 
practitioner as a licensed physician; 

(2) that the nurse practitioner has engaged or attempted to 
engage in the performance of medical acts other than 
according to the written protocols and collaborative 
practice agreement: at th e dir e ction of or und e r th e 
sup e rvi s ion of a physician lic e ns e d by th e M e dical 
Board who i s approv e d bv the Board to b e that nurs e 
practition e r' s s up e rvising physician: 

t^ that th e nurs e practition e r has p e rfonn e d or att e mpt e d 

to perform m e dical act s not approv e d in th e sit e 
s p e cific standing protocols or for which th e nurs e 
practition e r i s not qualifi e d by e ducation and training 
to p e rform. 

(3) {M that the nurse practitioner has been conv icted in 
any court of a criminal offense: 

(4) f?^ that the nurse practitioner is adjudicated mentally 
incompetent or that the nurse practitioner's mental or 
physical condition renders the nurse practitioner 
unable to safely function as a nurse practitioner: or 

(5) (4) that the nurse practitioner has failed to comply 
with any of the provisions of this Rule. 

(I) Fees: 
( I ) An application fee of one hundred dollars (SIOO.OO) 
shall be paid at the time of initial application for 
approval and each subsequent application for 



(2) 

ii! 

t4j 
(m) 



approval to practice. Th e on e hundr e d dollar 
(SIOO.OO) All initial, subsequent and volunteer 
application fee fees shall be equall) divided between 
the Board of Nursing and the Medical Board. No 
other fees are shared. Application fee shall be rvvents 
dollars (S20.00) for volunteer approval. 
The fee for annual renewal of approval, due July 1. is 
fift> dollars (S50.00). 

The fee for annual renewal ot' volunteer approval, due 
Julv I. shall be ten dollars (SIO.OO). 
{Vi No portion of any fee in this Rule is refundable. 
Practice During a Disaster. A nurse practitioner 



approved to practice in this State or another state is authorized 
to perfomt medical acts, tasks, or functions as a nurse 
practitioner under the supervision of a physician licensed to 
practice medicine jn North Carolina during a disaster with a 
county in which a state ot~ disaster has been declared or counties 
contiguous to a countv m which a state of disaster has been 
declared. The nurse practitioner shall notify the Boards jn 
writing of the names, practice locations and telephone numbers 
for the nurse practitioner and each primary superv ising phv sician 
within 15 davs of the first performance of medical acts, tasks, or 
functions as a nurse practitioner during the disaster. Teams of 
physician(s) and nurse practitioner(s) practicing pursuant to this 
Rule shall not be required to maintain on-site documentation 
describing supervisory arrangements and instructions for 
prescriptive authority as otherwise required pursuant to 
Paragraphs (h) and (i) of this Rule. 

Authorin- G.S. 90-6: 90-18(13). (14): 90-18.2: 90-1' 1.20(4): 90- 
ri.20('): 90-r 1. 23(b): 90-n\.36:90-\7\.37:90-\7\.42: 



732 



NORTH CAROLIX4 REGISTER 



October 15, 1998 



13:8 



TEMPORAR Y RULES 



The Cudifier of Rules has entered the following lemporaiy riile(s) in the North Carolina Administrutive Code. Pursuant to G.S. 
150B-21. Uel. publication of a temporary rule in the North Carolina Register serves as a notice of rule-making proceedings 
unless this notice has been previously published hy the agency. 



TITLE 10 - DEPARTMENT OF HEALTH 
AND HUMAN SERVICES 

Rule-making Agency: DHHS-Division of Medical Assistance 

Rule Citation: 10 NCAC 26H .0212-.021 3 

Effective Date: September 16. 1998 

Findings Reviewed and Approved by: Beecher R. Gray 

Authority for the rule-making: CS. 10H.4-25(b): lOHA-54: 
lOHA-55: 42 C.F.R. 447. Subpart C 

Reason for Proposed Action: This change is necessary to 
ensure the cotitinuing availability of an adequate level of 
services to Medicaid arid uninsured persons. 

Comment Procedures: Written comments concerning this 
rule-making action must be submitted to Portia It'. Rochelle. 
Rule-making Coordinator Division of Medical Assistance. 1985 
Umslead Drive. Raleigh. NC 2^603. 

CHAPTER 26 - MEDICAL ASSISTANCE 

SUBCHAPTER 26H - REIMBURSEMENT PLANS 

SECTION .0200 - HOSPITAL INPATIENT 
REIMBURSEMENT PLAN 

.0212 EXCEPTIONS TO DRG REIMBURSEMENT 

(a) Covered psychiatric and rehabilitation inpatient services 
provided in either specialty hospitals. Medicare recognized 
distinct part units (DPU). or other beds in general acute care 
hospitals shall be reimbursed on a per diem methodology. 

( 1 ) For the purposes of this Section. ps\chiatric inpatient 
services are defined as admissions where the primary 
reason for admission would result in the assignment 
of DRGs in the range 424 through 432 and 436 
through 437. 

For the puiposes of this Section, rehabilitation 
inpatient services are defined as admissions where the 
primary reason for admissions would result in the 
assignment of DRG 462. All services provided by 
specialty rehabilitation hospitals are presumed to 
come under this definition. 

(2) When a patient has a medically appropriate transfer 
from a medical or surgical bed to a psychiatric or 
rehabilitative distinct part unit within the same 
hospital, or to a specialty hospital the admission to the 
distinct part unit or the specialty hospital shall be 



recognized as a separate service which is eligible for 
reimbursement under the per diem methodology. 
Transfers occurring within general hospitals from 
acute care services to non-DPU psychiatric or 
rehabilitation services are not eligible for 
reimbursement under this Section. The entire hospital 
stay in these instances shall be reimbursed under the 
DRG methodology. 

(3) The per diem rate for psychiatric services is 
established at the lesser of the actual cost trended to 
the rate year or the calculated median rate of all 
hospitals providing psychiatric services as derived 
from the most recent as filed cost reports. 

(4) Hospitals that do not routinely provide psychiatric 
services shall have their rate set at the median rate. 

(5) The per diem rate for rehabilitation services is 
established at the lesser of the actual cost trended to 
the rate year or the calculated median rate of all 
hospitals providing rehabilitation services as derived 
from the most recent filed cost reports. 

(6) Rates established under this Paragraph are adjusted 
for infiation consistent with the methodology under 
Rule .0211 Subparagraph (d)(5) of this Section. 

(b) To assure compliance with the separate upper payment 
limit for State-operated facilities, the hospitals operated by the 
Department rf Human Resources and all the primary affiliated 
teaching hospitals for the University of North Carolina Medical 
Schools shall be reimbursed their reasonable costs in accordance 
with the provisions of the Medicare Provider Reimbursement 
Manual. This Manual referred to as. (HCFA Publication #15-1) 
is hereby incorporated by reference including any subsequent 
amendments and editions. A copy is available for inspection at 
the Division of Medical Assistance, 1985 Umstead Drive. 
Raleigh, NC. Copies may be obtained from the U.S. Department 
of Commerce, National Technical Information Service. 
Subscription Department. 5285 Port Royal Road. Springfield. 
VA 22161 at a cost of one hundred forty seven dollars 
($147.00). Purchasing instructions may be received by calling 
(703) 487-4650. Updates are available for an additional fee. 
The Division shall utilize the DRG methodology to make interim 
pa\ments to providers covered under this Paragraph, setting the 
hospital unit value at a level which can best be expected to 
approximate reasonable cost. Interim payments made under the 
DRG methodology to these providers shall be retrospectively 
settled to reasonable cost. 

(c) When the Norplant contraceptive is inserted during an 
inpatient sta> the current Medicaid fee schedule amount for the 
Norplant kit shall be paid in addition to DRG reimbursement. 
The additional payment for Norplant shall not be paid when a 
cost outlier or day outlier increment is applied to the base DRG 
payment. 

(d) Hospitals operating Medicare approved graduate medical 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



733 



TEMPOR.4RY RULES 



education programs shall recei\e a per diem rate adjustment 
which reflects the reasonable direct and indirect costs of 
operating these programs. The per diem rate adjustment shall be 
calculated in accordance with the provisions of Rule .0211 
Paragraph (t~) of this Section. 

(e) For th e 12 month p e riod e nding S e pt e mb e r 30. 1005. 
hosp i tal s licens e d b> th e Stat e of North Carolina and reimbursed 
under the DRG m e thodology for mor e than 50 p e rc e nt of 
M e d i caid i n pa tie nt discharg e s shall be entitl e d to an add i tional 
pa\in e nt i n an amount d e t e rmin e d b\ the Director of th e 
Division of Medical Assistanc e , subject to the following 
provi s ions: Hospitals licensed by the State of North Carolina 
and reimbursed under the DRG methodolo g\ for more than 50 
percent of their Medicaid inpatient discharges for the 12-month 
period ending September 30. 1998 shall be entitled to an 
additional pa\ment for in patient and outpatient hospital services 
in an amount determined by the Director of the Division of 
Medical Assistance, subject to the follow ing pro\ isions: 

(1) Th e maximum paym e nts aut h oriz e d b\ this Paragraph 
for public hospitals that qual i fx und e r th e crit e ria in 
Pa r t { A) of this Subparagraph shall b e calc ul a te d by 
asc e rtaining th e r e asonabl e cost of inpati e nt and 
outpati e nt — hospital — M e dicaid — s e rvic es . — pkis — the 
r e asonabl e direct and indir e ct costs attributab le to 
M e dica i d service s of op e rating Medicar e approv e d 
graduat e m e dical e ducation programs, l e ss M e dicaid 
pav ments r e c e iv e d or to b e r e c e iv e d for th e se s e r\ ic e s. 
With r e sp e ct t o qualifx i n g hosp i tals that ar e not public 
hospitals — qualifi e d — und e r — Part — (-A-) — evf — th+s 
Subparagraph, th e ma.ximum pavm e nt authoriz e d bv 
this Paragraph shall b e calculat e d bv asc e rtaining 
6 4 .71 p e rc e nt of th e unr e imburs e d r e asonabl e cost 
ca l culated by us e of th e m e thodo l og> d es crib e d in th e 
pr e c e ding se nt e nc e , not to exc ee d i n th e aggr e gat e for 
all s uch hospitals t1fty on e million s e v e n hundr e d 
thousand dollars ($5 1 .700.000). For purposes of this 
Subparagraph: To ensure that the payments 
authorized by this Subparagraph for qualified public 
hospitals that qualifi under the criteria in Part (A) of 
this Subparagraph, do not exceed the upper limits 
established by 42 CFR 447.272. the maximum 
payments authorized for qualified public hospitals 
shall be determined for all such qualified public 
hospitals for the 12-month period ending September 
30. 1998 by calculating the "Medicaid Deficit" for 
each hospital. The Medicaid Deficit shall be 
calculated by ascertainin g the reasonable costs of 
inpatient and outpatient hospital Medicaid serv ices: 
plus the reasonable direct and indirect costs 
attributable to inpatient and outpatient Medicaid 
serv ices of operating Medicare approved graduate 
medical education programs: less Medicaid payments 
received or to be received for these services. For 
purposes of this Subparagraph: 
(A) A qualified public hospital is a hospital that 
meets the other requirements of this Paragraph 
and: 
(i) v\as owned or operated bv a State (or by 



an instrumentalitv or a unit of 
government within a State) from 
September 8 through and including 
September 30. +99»^ 1998: 

(ii) indicat e d its l e gal e ntitv status as a 
gov e rnm e nt unit on th e Hospital Lic e ns e 
R e n e wal — Application — fil e d with th e 
Division of Facility Servic es North 

Carolina D e partm e nt — ef — Human 

Resourc es for th e 1995 cal e ndar >ear: 
aft4 verified its status as a public 
hospital by certifying State, local- 
hospital district or authority government 
control on the most recent version of 
Form HCFA-1514 filed with the Health 
Care Financing Administration. U.S. 
Department of Health and Human 
Services on or before September 8. 
1998: and 

(iii) submits to th e Division of M e dical 
As s istanc e on or b e for e S e pt e mb e r 20. 
1905 by us e of a fomi pr e scrib e d bv the 
Divi s ion. — a — c e rtificate — of — public 
e xp e nditur es to support th e non federal 
shar e of th e paym e nt it shall r e c e iv e 
pursuant to this Paragraph, files w 'th the 
Division on or before Septenu •; 8. 
1998 by use of a form prescribed by the 
Division a certificate of public 
expenditures to support a portion of the 
non-federal share of the payment rt shall 
receive pursuant to this Subparagraph. 

(B) Reasonable costs shall be ascertained in 
accordance with the provisions of the Medicare 
Provider Reimbursement Manual Manual. 
This Manual, r e f e rr e d to as HCFy\ Publication 
"15 1. is h e r e by incorporat e d by r e f e r e nc e 
including — sub se qu e nt — am e ndm e nts — aftd 
editions. A copy of this Manual is ava i lable 
for insp e ction at th e Divi s ion of M e dical 
A s si s tanc e . 1985 Umst e ad Driv e . Ral e igh. NC. 
Copies — Hw. — be — obtain e d — frem — the — yS 
D e partm e nt of Commerce. National Technical 
Infonnation Serv ic e . Subscription Departm e nt. 
5285 Port Roval Road. Springfi e ld. VA 22161. 
at a cost of one hundr e d forty s e v e n dollars 
(S1 4 7.00). — Purchasing instructions mav b e 
r e c e iv e d bv calling (703) 4 87 1 650. Updat e s 
ar e availabl e for an additional f ee , as defined in 
Paragraph (b) of' tMs Rule. 

(C) The phrase "Medicaid payments received or to 
be received for these services" shall exclude all 
Medicaid disproportionate share hospital 
payments received or to be received. 
receiv ed. except for paym e nts r e c e iv e d or to b e 
r e c e iv e d pur s uant to 10 NCAC 26H .0213(d). 

(2) Should b 4 .7l p e rc e nt of th e unr e imburs e d r e asonabl e 
cost of M e dicaid s e rv i c es for qual i fy ing hospitals that 



734 



NORTH CAROLIXA REGISTER 



October 15, ] 998 



13:8 



TEMPOR.4RY RULES 



ar e not qualifi e d public hospitals b e d e t e rmin e d b\ th e 
Dir e ctor of the Divis i on of M e dical A ss istanc e to 
exceed th e sum of fift\ on e million s e v e n hundr e d 
thousand — dollar s — (S5 1.700.000). — tlw — maximum 
paym e nt ot'tlfh one million s e v e n hundr e d thou s and 
dollars (S5 1.700.000) to such hospitals authorized by 
this Paragraph shall b e prorat e d among such hospitals 
bas e d on unr e imburs e d r e asonabl e costs. Qualified 
public hospitals shall receive a payment under this 
Paragraph in an amount (including the public 
expenditures certified to the Di\ ision b\ each hospital 
for the non-federal share) not to exceed each 
hospital's Medicaid Deficit. 

(3) Payments authoriz e d b_\ this Paragraph shall b e mad e 
on or befor e S e pt e mb e r 30. 1905 sol e l> on th e basis 
of an es timat e of costs incurr e d and paym e nts 
r e c e iv e d for M e dicaid s e rvic e s during th e 12 months 
e nding S e ptemb e r 30. IQ95. — Th e Dir e ctor of th e 
Div i sion of M e dical As s istanc e shall d e t e rmin e th e 
amount of th e e stimat e d pavm e nts to be made bv 
analys i s of costs incurred and pavm e nt s rec e iv e d for 
M e dicaid se rvic e s as r e port e d on cost r e ports for 
fi s cal y e ar s e nding in 100 1 til e d b e for e S e pt e mb e r 15. 
1005 and suppl e m e nt e d b\ such additional financial 
information a s i s asailabl e to th e D i r e ctor wh e n th e 
es timat e d paym e nt s ar e calculat e d if and to th e e xt e nt 

isr'" that th e Dir e ctor conclud e s that such additional 
financial — information — is — r e liabl e — aftd — r ele vant. 
Hospitals licensed by the State of North Carolina and 
reimbursed under the DRG methodology for more 
than 50 percent of their Medicaid inpatient discharges 
for the 12-months ending September 30. 1908 that are 
not qualified public hospitals as defined jn this 
Paragraph shall be entitled to an additional payment 
under this Subparagraph for the Medicaid Deficit 
calculated in accordance vsith Subparagraph ( I ) of 
this Paragraph in an amount not to exceed the 
Medicaid Deficit. 

(4) Sol e ly to e nsur e that es timat e d paym e nts pursuant to 
Subparagraph (3) of th i s Paragraph do not e xc ee d the 
hospital sp e cific and stat e aggr e gat e upper limits to 
such paym e nts e stabli s h e d bv appl i cabl e federal law 
and r e gulation, such paym e nts shall be cost settled as 
det e rmin e d by an ind e p e nd e nt CPA furni s h e d bv th e 
provid e r, ba se d on cost r e ports covering the 12 
months e nding S e pt e mber 30. 1005. and hosp i tal 
r e cipi e nt s of such payments shall promptly r e fund 
s uch paym e nts if and to the e xtent that such paym e nts 
e xc ee d th e applicabl e upper limit. — No additional 
paym e nts s hall b e made in conn e ction y\ ith th e cost 
s e ttl e m e nt. Payments authorized by tfus Paragraph 
shall be made solely on the basis of an estimate of 
costs incurred and payments receiv ed for inpatient and 
outpatient Medicaid services during the payment 
fiscal year 1098. The Director of the Division of 
Medical Assistance shall determine the amount of the 
estimated payments to be made by analysis of costs 
incurred and payments received for Medicaid services 



as reported on cost reports for fiscal year ending in 
1997 filed before September 8, 1998 and 
supplemented by additional financial information 
available to the Director when the estimated pay ments 
are calculated if and to the extent that the Director 
concludes that the additional financial information is 
reliable and relevant. 
(5) Th e paym e nt s authoriz e d bv this Paragraph shall b e 
e ff e ctiv e in accordanc e with G.S. 108A 55(c). To 
ensure that estimated pavments pursuant to this 



i6J 



Paragraph do not exceed the State aggregate upper 
limits to such payments established by applicable 
federal law and regulation (42 CFR 447.272). such 
payments shall be cost settled within 12 months of 
receipt of tjie completed cost report covering the 12- 
month period ending September 30. 1998. There shall 
be a separate cost settlement procedure for inpatient 
and outpatient hos pital serv ices. In addition, for both 
inpatient and outpatient hospital services, there shall 
be a separate cost settlement procedure for state- 
operated hospitals and for non-state operated 
hospitals. As to each of these separate cost settlement 
procedures, if it should be determined that aggregate 
payments under this Paragraph exceed aggregate 
upper limits for such payments, any hospital that 
received payments under this Paragraph in excess of' 
unreimbursed reasonable costs as defined in this 
Paragraph shall promptly refund hs proportionate 
share of aggregate payments in excess of aggregate 
upper limits. The proportionate share of each such 
hospital shall be ascertained bv calculating for each 
such hospital its percentage sh'ire of aJJ payments to 
all members of thie cost settle nent group that are in 
excess of unreimbursed reasonable costs, and 
multiplying that percentage times the amount by 
which aggregate payments being cost settled exceed 
aggregate upper limits applicable to such payments. 
No additional pavments shall be made in connection 
with these cost settlements. 



The pavments authorized by this Paragraph shall be 
effective in accordance with G.S. 108A-55(c). 



:5(h): 



lOSA-54: 



Histoiy Note: Auihorin- G.S. 108.4- 

108.4-55/0: 42 C.F.R. 44'. Subpart C: 

Eff. Febriiaiy 1. 1995: 

Filed as a Temporary .4mendmettt Eff. September 15. 1995. for 

a period of 180 days or until I lie permanent rule becomes 

effective, whichever is sooner: 

.4mended Eff. Januaiy 1. 1996: 

Temporaiy .4mendment Eff September 25. 1996: 

Temporaiy .4mendment Eff September 30. 199~; 

Temporary .4mendment Expired July 31. 1998: 

Temporar\- .4mendment Eff. September 16. 1 998. 

.0213 DISPROPORTIONATE SHARE HOSPITALS 

(a) Hospitals that serve a disproportionate share of 
low-income patients and have a Medicaid inpatient utilization 
rate of not less than one percent are eligible to receive rate 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



735 



TEMPORA RYR ULES 



adjustments. The cost report data and tlnancial information that 
is required in order to quaiit\ as a disproportionate share 
hospital effective April 1 . 1 99 1 is based on the fiscal year ending 
in 1989 for each hospital, as submitted to the Division of 
Medical Assistance on or before April 1. 1991. The cost report 
data and financial information to quality as a disproportionate 
share hospital etTecti\e JuK 1. 1991 is based on the fiscal \ear 
ending in 1990 for each hospital, as submitted to the Div ision of 
Medical Assistance on or before September 1. 1991. In 
subsequent vears. qualifications effecti\e JuK I of an> particular 
\ear are based on each hospital's fiscal year ending in the 
preceding calendar year. The patient davs. costs, revenues, or 
charges related to nursing facility services, swing-bed services. 
home health services, outpatient services, or any oti'or service 
that is not a hospital inpatient ser\ ice cannot be useu to qualify 
for disproportionate share status. A hospital is deemed to be a 
disproportionate share hospital if: 

( 1 ) The hospital has at least two obstetricians w ith staff 
privileges at the hospital who have agreed to pro\ ide 
obstetric services to indiv iduals eligible for Medicaid. 
In the case of a hospital located in a rural area, the 
term obstetrician includes any physician with staff 
privileges at the hospital to perform non-emergency 
obstetric services as of December 21. 1987 or to a 
hospital that predominantK- serves individuals under 
18 \ears of age: and 

(2) The hospital's Medicaid inpatient utilization rate, 
defined as the percentage resulting from dividing 
Medicaid patient da>s b\ total patient da\s. is at least 
one standard deviation above the mean Medicaid 
inpatient utilization rate for all hospitals that receive 
Medicaid pa\ments in the state: or 

(3) The hospital's low income utilization rate exceeds 25 
percent. The low-income utilization rate is the sum 
of: 

(A) The ratio of the sum of Medicaid inpatient 
revenues plus cash subsidies received from the 
State and local governments, divided b\' the 
hospital's total patient revenues; and 

(B) The ratio of the hospital's gross inpatient 
charges for charity care less the cash subsidies 
for inpatient care received from the State and 
local governments divided by the hospital's 
total inpatient charges; or 

(4) The sum of the hospital's Medicaid revenues, bad 
debts allowance net of recoveries, and charitv care 
exceeds 20 percent of gross patient revenues; or 

(5) The hospital, in ranking of hospitals in the State, from 
most to least in number of Medicaid patient days 
pro\ ided. is among the top group that accounts for 50 
percent of the total Medicaid patient da\s provided by 
all hospitals in the State: or 

(6) it is a Psvchiatric hospital operated by the North 
Carolina Department of Human Resources. Division 
of Mental Health. Developmental Disabilities. 
Substance Abuse Services (DMH DD'SAS) or UNC 
Hospitals operated by the University of North 
Carolina. 



(b) The rate adjustment for a disproportionate share hospital 
is 2.5 percent plus one fourth of one percent for each percentage 
point that a hospital's Medicaid inpatient utilization rate exceeds 
one standard dev iation of the mean Medicaid inpatient utilization 
rate in the State. The rate adjustment is applied to a hospital's 
pa)ment rate exclusive of an\ previous disproportionate share 
adjustments. 

(c) An additional one time pavment for the 12-month period 
ending September 30. 1995. in an amount determined b\ the 
Director of the Division of Medical Assistance, may be paid to 
the Public hospitals that are the primary affiliated teaching 
hospitals for the University of North Carolina Medical Schools 
less pavments made under authoritv of Paragraph (d) of this 
Rule. The payment limits of the Social Security Act. Title XIX. 
Section 1923(g)(1) applied to this pavment require that when 
this pa\ment is added to other Disproportionate Share Hospital 
payments, the additional disproportionate share payment will not 
exceed 100 percent of the total cost of providing inpatient and 
outpatient services to Medicaid and uninsured patients less all 
payments received for services provided to Medicaid and 
uninsured patients. The total of all payments ma\ not exceed the 
limits on DSH funding as set for the State by HCFA. 

(d) Effective July I, 1994. hospitals eligible under 
Subparagraph (a)(6) of this Rule shall be eligible for 
disproportionate share payments, in addition to other pavments 
made under the North Carolina Medicaid Hospital 
reimbursement methodology, from a disproporti 'ate share pool 
under the circumstances specified in Subparagraphs ( I ). (2) and 
(3) of this Paragraph. 

(1) An eligible hospital will receive a monthly 
disproportionate share payment based on the monthly 
bed days of services to low income persons of each 
hospital divided b\' the total monthlv bed days of 
services to low income persons of all hospitals items 
allocated funds. 

(2) This payment shall be in addition to the 
disproportionate share pavments made in accordance 
with Subparagraphs (a)(1) through (5) of this Rule. 
However. DMH DD SAS operated hospitals are not 
required to qualify under the requirements of 
Subparagraphs (a)( 1 ) through (5) of this Rule. 

(3) The amount of allocated funds shall be determined by 
the Director of the Division of Medical Assistance, 
but not to exceed the quarterK grant award of funds 
(plus appropriate non-federal match) earmarked for 
disproportionate share hospital pavments less 
pavments made under Subparagraphs (a)( 1 ) through 
(5) of this Rule divided b\ three. In Subparagraph 
(d)( 1 ) of this Rule, bed days of services to low income 
persons is defined as the number of bed da\s provided 
to individuals that have been determined by the 
hospital as patients that do not possess the financial 
resources to pav' portions or all charges associated 
with care provided. Low income persons include 
those persons that have been determined eligible for 
medical assistance. The count of bed dav s used to 
determine pavment is based upon the month 
immediateK prior to the month that pavments are 



736 



NORTH CAROLISA REGISTER 



October 15, 1998 



13:8 



TEMPORAR Y RULES 



(. 



made. Disproportionate share payments to hospitals 

are limited in accordance with The Social Security 

Act as amended. Title XIX section 1923(g), limit on 

amount of pavment to hospitals. 

(e) Subject to the availability of funds, hospitals that: qualify 

as disproportionate share hospitals under Subparagraphs (a)( 1 ) 

through (5) of this Rule for the fiscal years ended September 30. 

1995, 1996 and 1997; operate Medicare approved graduate 

medical education programs and reported Medicaid costs 

attributable to such programs to the Division on cost reports for 

fiscal years ending in 1995, 1996 and 1997; and incur for the 

12-month period ending September 30. 1997 unreimbursed costs 

(calculated without regard to payments under either this 

Paragraph or Paragraph (0 of this Rule) for providing inpatient 

and outpatient services to uninsured patients in an amount in 

excess of two million five hundred thousand dollar^- 

($2,500,000) shall be eligible for disproportionate share 

payments for such services from a disproportionate share pool 

under the circumstances specified in Subparagraphs ( 1 ) through 

(7) of this Paragraph. 

(1) Qualification for the 12 month period ending 
September 30. 1996 shall be based on cost report data 
and uninsured patient data certified to the Division by 
hospitals on or before September 23. 1996 for fiscal 
years ending in 1995. in connection with the 
disproportionate share hospital application process. 
Qualification for subsequent 12 month periods ending 
September 30 of each year shall be based on cost 
report data and uninsured patient data certified to the 
Division by hospitals on or before September 1 of 
each subsequent year, for the fiscal year ending in the 
preceding calendar year. 

(2) Any payments made pursuant to this Paragraph shall 
be calculated and paid no less frequently than 
annually, and prior to the calculation and payment of 
any disproportionate share payments pursuant to 
Paragraph (f) of this Rule. 

(3) For the 12 month period ending September 30. 1996 
a payment shall be made to each qualified hospital in 
an amount detennined b\ the Director of the Division 
of Medical Assistance based on a percentage (not to 
exceed a maximum of 23 percent) of the 
unreimbursed costs incurred by each qualified 
hospital for inpatient and outpatient services provided 
to uninsured patients. 

(4) In subsequent 12 month periods ending September 
30th of each year, the percentage payment shall be 
ascertained and established by the Division by 
ascertaining funds available for payments pursuant to 
this Paragraph divided by the total unreimbursed costs 
of all hospitals that qualifx for pavments under this 
Paragraph for providing inpatient and outpatient 
services to uninsured patients. 

(5) The payment limits of the Social SecuritN Act. Title 
XIX, section 1923(g)(1) applied to the payments 
authorized by this Paragraph require that when this 
payment is added to other disproportionate share 
hospital payments, the total disproportionate share 



payments shall not exceed 100 percent of the total 
costs of providing inpatient and outpatient services to 
Medicaid and uninsured patients for the fiscal year in 
which such payments are made, less all payments 
received for services to Medicaid and uninsured 
patients. The total of all disproportionate share 
hospital payments shall not exceed the limits on 
disproportionate share hospital funding as established 
for this State by HCFA. 

(6) To ensure that payments pursuant to Paragraph (e) do 
not exceed the State aggregate upper limits to such 
payments established by applicable federal law and 
regulation (42 C.F.R. 447.272), such payments shall 
be cost settled within 12 months of receipt of the 
completed cost report covering the period for which 
such payments are made. If any hospital receives 
payments, pursuant to this Subparagraph in excess of 
the percentage established by the Director under 
Subparagraph (d)(3) of this Rule, ascertained without 
regard to other disproportionate share hospital 
payments that may have been received for services 
during the 12-month period ending September 30, 
1996. such excess payments shall promptly be 
refunded to the Division. No additional payment shall 
be made to qualified hospitals in connection with the 
cost settlement. 

(7) The pa>ments authorized by Subparagraph (6) shall 
be effective in accordance with G.S. 108A-55(c). 

(0 An additional one-time disproportionate share hospital 
payment during the 12-month period ending September 30, 1997 
1998 (subject to the availability of funds and to the payment 
limits specified in this Paragraph) shall be paid to qualified 
public hospitals. For purposes of this Paragraph, a qualified 
public hospital is a hospital that qualifies for disproportionate 
share hospital status under Subparagraphs (a)( 1 ) through (5) of 
this Rule; does not qualify for disproportionate share hospital 
status under Subparagraph (a)(6) of this Rule; was owned or 
operated by a State (or by an instrumentality or a unit of 
government within a State) from September 1, 1997 8^ 1998 
through and including September 30. 1907; 1998; verified its 
status as a public hospital by certifying state, local, hospital 
district or authority government control on the most recent 
version of Form HCFA-1514 tiled with the Health Care 
Financing Administration, U.S. Department of Health and 
Human Services on or before September 1. 199 7 8. 1998; files 
with the Division on or before September 1 1997 8^ 1998; by use 
of a form prescribed by the Division a certification of its 
unreimbursed charges for inpatient and outpatient services 
provided to uninsured patients during the fiscal year ending in 
1906; 1997; and submits to the Division on or before September 
1, 1007 b> use of a form prescribed by the Division a certificate 
of public expenditures. 

( 1 ) The payment to qualified public hospitals pursuant to 
this Paragraph for the 12-month period ending 
September 30, +097 1998 shall be based on and shall 
not exceed the unreimbursed charges certified to the 
Division by each such hospital by use of a form 
prescribed by the Division for inpatient and outpatient 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



737 



TEMPORARY RILES 



ser\ices presided to uninsured patients for the fiscal 
Near ending in 1Q96. 1997. to be con\erted b_\ the 
Di\ision to unreimbursed cost b\ multipi\ing 
unreimbursed charges times the cost-to-charge ratio 
established b\ the Di\ ision for each hospital for the 
fiscal \ear ending in 1996. 1997. Paxments 
authorized b\ this Paragraph shall be made no less 
frequenth than annualK. 

(2) .An\ payments pursuant to this Paragraph shall be 
ascertained and paid after an\ disproportionate share 
hospital pa>Tnents that ma\ ha\ e been or ma\ be paid 
b\ the Di\ ision pursuant to Paragraphs (d) and (e) of 
this Rule. 

(3) The pa\ment limits of the Social Securit> Act. Title 
XIX. Section 1923(g)(1) applied to this pa\ment 
require that when this pa\ment is added to other 
disproportionate share hospital pa>ments. the total 
disproportionate share hospital payments will not 
exceed 100 percent of the total costs of pro\iding 
inpatient and outpatient services to Medicaid and 
uninsured patients for the fiscal \ear in which such 
payments are made, less all pa\ments recei\ed for 
ser\ ices to Medicaid and uninsured patients for that 
>ear. The total of all DSH payments b\ the Di\ ision 
maN not exceed the limits on disproportionate share 
hospital funding as established for this State b\ 
HCFA for the fiscal \ear in which such payments are 
made. 

(4) To ensure that estimated pa\rnents pursuant to 
Paragraph (f) do not exceed the State aggregate upper 
limits to such payments established b\ applicable 
federal law and regulation (42 C.F.R. 447.272). such 
payments shall be cost settled within 12 months of 
receipt of the completed cost report co\ering the 12 
month period for which such payments are made. No 
additional payments shall he made in connection w ith 
the cost settlement. 

(5) The payments authorized by Paragraph (f) of this Rule 
shall be effective in accordance with G.S. 108A- 
55(c). 

(g) Effecti\ e w ith dates of payment beginning October 3 1 . 
1996. hospitals that provide services to clients of State .Agencies 
are considered to be a Disproportionate Share Hospital (DSH) 
when the follow ing conditions are met: 

(1) The hospital has a Medicaid inpatient utilization rate 
not less than one percent and has met the 
requirements of Subparagraph (a)( 1 ) of this Rule; and 

(2) The State Agency has entered into a Memorandum of 
Understanding (MOU) with the Division of Medical 
Assistance (Division): and 

(3) The inpatient and outpatient services are authorized 
by the State Agency for vshich the uninsured client 
meets the program requirements. 

(A) For purposes of this Paragraph, uninsured 
patients are those clients of the State Agency 
that have no third parties responsible for any 
hospital services authorized by the State 
.Aaencv. 



(B) DSH payments are paid for services to 
qualified uninsured clients on the following 
basis: 

(i) For inpatient services the amount of the 
DSH pay ment is determined by the State 
Agency in accordance with the 
applicable Medicaid inpatient payment 
methodology as stated in Rule .02 1 1 of 
this Section. 

(ii) For outpatient services the amount of 
the DSH payment is determined by the 
State Agency in accordance with the 
applicable Medicaid outpatient payment 
methodology as stated in Section 24 of 
Chapter 18 of the 1996 General 
Assembly of North Carolina. 

(iii) No federal funds are utilized as the non- 
federal share of authorized payments 
unless the federal fijnding is specifically 
authorized by the federal funding 
agency as eligible for use as the non- 
federal share of payments. 

(C) Based upon this subsection DSH payments as 
submitted by the State Agency are to be paid 
monthly in an amount to be reviewed and 
approved by t'^e Division of Medical 
.Assistance. The u il of all payments may not 
exceed the limits on Disproportionate Share 
Hospital funding as set forth for the state by 
HCFA. 

(h) An additional disproportionate share hospital payment 
durin^i the 12-month period ending September 30. 1998 (subject 
to the availabilit\ of funds and to the pavment limits specified m 
this Paragraph ) shall be paid to Hospitals that qualil\ for 
disproportionate share hospital status under Subparagraphs 
(a)( 1 ) through (5) of this Rule and prov ide inpatient or outpatient 
hospital serv ices to Medicaid Health Maintenance Organizations 
("HMO") enrollees during the vear endin g September 30. 19^ ' 
For purposes of this Paragraph, a Medicaid HMO enrollee js a 
Medicaid beneficiarv who receives Medicaid services through a 
Medicaid HMO: a Medicaid HMO is a Medicaid managed care 
organization, as defined in Section 1903 (m)( 1 )( A), that [s 
licensed as a HMO and provides or arranges for services for 
enrollees under a contract pursuant to Section 1903 (m)(2)( A)(i) 
through (xi). To qualify for a DSH payment under this 
Paragraph, a hospital must also file with the Division on or 
before September 8^ 1998 by use of a form prescribed by. the 
Division a certification of jts charges for inpatient and outpatient 
services prov ided to Medicaid HMO enrollees during the fiscal 
year ending in 1997. 

The pav ment to qualified hospitals pursuant to this Paragraph for 
the 12-month period ending September 30. 1998 shall be based 
on charges certified to the Division by each hospital by use of a 
fomi prescribed by the Division for inpatient and outpatient 
Medicaid HMO services for the fiscal vear ending m 1997. 
converted by the Division to cost by multiplying charges times 
the cost-to-charge ratio established by the Division for each 
hospital for the fiscal y ear ending in 1 997. 



738 



NORTH CAROLIX4 REGISTER 



October 15. 1998 



13:8 



TEMPORAR Y RULES 



( 1) The pa\ment shall then be determined b\' multipl\ ing 
the cost times a percentage determined by the 
Division. The payment percentage established b\ the 
Division will be calculated to ensure that the 
Medicaid HMO DSH payment authorized by this 
Paragraph js equivalent (as a percentage ot' reasonable 
cost) to the Medicaid supplemental payment 
authorized h\ Paragraph (e) of this Rule. 

(2) Payments pursuant to this Paragraph shall be 
ascertained and paid after any other disproportionate 
share hospital payments that may have been paid by 
the Division for the 1 2-month period ending 
September 30, 1998. 

(3) The payment limits of the Social Security Act. Title 
XIX, Section I923(g)( 1 ) applied to this payment 
require that when this paxment js added to other 
disproportionate share hospital payments, the total 
disproportionate share hospital pa\ments will not 
exceed 100 percent of the total costs ot' providing 
inpatient and outpatient services to Medicaid and 
uninsured patients for the fiscal \ear jn which such 
payments are made, less all payments received for 
services to Medicaid and uninsured patients for that 
year The total of all DSH payments by the Division 
ma\ not exceed the limits on Disproportionate Share 
hospital funding as established for this State by 
HCFA for the fiscal vear in which such payments are 
made. 

(4) To ensure that estimated payments pursuant to this 
Paragraph do not exceed the State aggregate upper 
limits to such payments established by applicable 
federal law and regulation (42 CFR 447.272). such 
payments shall be cost settled within 12 months of 
receipt of the completed cost report covering the 12 
month period for which such payments are made. No 
additional payments shall be made in connection yvith 
the cost settlement. 

(5) The payments authorized by this Paragraph shall be 
effective in accordance yvith G.S. 108A-55(c). 

HisloijNote: Authorin-G.S. I08A-:5(h); IOHA-54: 108A-55: 

42C.F.R. 44^. Subpart C: 

Ejf. February I. 1995: 

Amended Eff. July 1 . 1995: 

Filed as a Temporary Amendment Eff. September 15. 1995. for 

a period of 180 days or until the permanent rule becomes 

effective, whichever is sooner: 

Filed as a Temporary Amendment Eff. September 29. 1995. for 

a period of IHO days or until the permanent rule becomes 

effective, whichever is sooner: 

Amended Eff. January 1. 1996: 

Temporaiy Amendment Eff. September 25. 1996: 

Teniporaiy .Amendment Eff. April 15. 199': 

Temporary .Amendment Eff September 30. 199"^: 

TemporaiT Amendment Eff. September 16. 1998. 



TITLE 15A - DEPARTMENT OF ENVIRONMENT 
AND NATURAL RESOURCES 

Rule-making Agency: DENR - Marine Fisheries Commission 

Rule Citation: 15A NCAC 3J .0103: 3M .0501 

Effective Date: October 22. 1998 

Findings Reviewed by Beecher R. Gray: Approved 

Authority for the rule-making: (JS. 113-134: 113-182: 113- 
221: 1438-28952 

Reason for Proposed Action: 77?^ recent stock status report 
lists red drum as stressed-declining. MFC Guidelines for 
Fisheiy Management Plans require provisional plans within 90 
days of the release of a stock status report indicating a species 
is determined to be stressed-declining or depressed. This 
temporaiy rule will protect the existing spawning stock, allow 
for rebuilding to target levels, reduce recreational harvest 
mortality, protect abundant year classes, restrict the directed 
commercial fishery for red drum and reduce the bycatch of 
undersized red drum by insuring all nets are fished frequently 
and fish are effectively released. 

Comment Procedures: Written comments may be submitted to 
the Marine Fisheries Commission. Attention Juanita Gaskill. PO 
Box ~69. Morehead Cit}\ NC 28557. Comments will he 
accepted through December 15. 1998. 

CHAPTER 3 - MARINE FISHERIES 

SUBCHAPTER 3J - NETS, POTS, DREDGES, 
AND OTHER FISHING DEVICES 

SECTION .0100 - NET RULES, GENERAL 

.0103 GILL NETS, SEINES, IDENTIFICATION, 
RESTRICTIONS 

(a) It is unlawful to use a gill net y\ith a mesh length less than 
2''2 inches. 

(b) The Fisheries Director may, by proclamation, limit or 
prohibit the use of gill nets or seines in coastal yvaters, or any 
portion thereof, or impose any or all of the following restrictions 
on the use of gill nets or seines: 



(1) 
(2) 
(3) 
(4) 
(5) 



Specify' area. 

Specify' season. 

Specify gill net mesh length. 

Specify means/methods. 

Specify net number and length, 
(c) It is unlawful to use fixed or stationai^ gill nets in the 
Atlantic Ocean or any gill nets in internal coastal yvaters unless 
such nets are marked by attaching to them at each end two 
separate yellow buoys which shall be of solid foam or other solid 
buoyant material no less than five inches in diameter and no less 
than five inches in length. Gill nets which are not connected 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



739 



TEMPORARY RULES 



together at the top line shall be considered as indi\ idual nets. 
requiring two buo\s at the end of each indi\ idual net. Gill nets 
connected together at the top line shall be considered as a 
continuous net requiring two buo>s at each end of the 
continuous net. .Kn\ other marking buo\s on gill nets shall be 
\ello\\ except that one additional identification buo\ of an> 
color or an_\ combination of colors ma\ be used at either or both 
ends. The owner shall al\\a\s be identified on a huo\ on each 
end either b\ using engraved buo>s or b\ attaching engra\ed 
metal or plastic tags to the buo\s. Such identification shall 
include one of the following: 

( 1 ) Owner's N.C. motor boat registration number, or 

(2) Owner's L'.S. \essel documentation name, or 

(3) Owner's last name and initials. 

(d) It is unlawful to use gill nets: 

( 1 ) \\ ithin 200 \ards of an\ pound net w ith lead and 
pound or heart in use: 

(2) From March I through October 3 1 in the Intracoastal 
Water\\a> within 150 \ards of an\ railroad or 
highwa\ bridge. 

(e) It is unlawful to use gill nets within 100 feet either side of 
the center line of the intracoastal Waterwa\ Channel south of 
Quick Flasher No. 54 in .Alligator Ri\er atthe southern entrance 
to the Intracoastal Waterwa\ to the South Carolina line, unless 
such net is used in accordance w ith the follow ing conditions: 

( 1) No more than two gill nets per boat ma\ be used at 
an\ one time; 

(2) An\ net used must be attended b\ the fisherman from 
a boat who shall at no time be more than 100 \ards 
from either net: and 

(3) .An) individual setting such nets shall remo\e them. 
v\hen necessap.. in sutTicient time to permit 
unrestricted boat na\ igation. 

(f) It is unlawful to use drift gill nets in \iolation of \5.\ 
NCAC 3 J .OIOU-1 and Paragraph (d) of this Rule. 

(g) It is unlawful to use gill nets from Ma\ 1 through October 
31 with a mesh length of less than fi\e inches in internal coastal 
waters (including joint waters) unless attended. \n order to be 
considered attended, the fishermen must be within 100 \ards of 
an\ net emplo\ed b\ that fisherman. 

Hisloiy Xote: Auihonty G.S. 113-134; 113-182; 113-221; 

143B-289.52; 

Efi: Jamian- 1 . 1991; 

Amended Eff. August 1. 1998; March 1. 1996; March 1, 1994; 

July 1. 1993; September 1. 1991. 

TemporaiT Amendment Eff. October 22. 1998. 

SL BCH.APTER 3M - FINFISH 

SECTION .0500 - OTHER FINFISH 

.0501 RED DRUM 

(a) The Fisheries Director. ma\ b_\ proclamation, impose any 
or all of the following restrictions on the taking of red drum: 

( 1 ) Specif}, areas. 

(2) Specify seasons. 

(3) Specify quantity for fish taken b\ commercial gear. 



(4) Specify means methods. 

(5 ) Specify size for fish taken b\ commercial gear. 

(b) It is unlawful to possess s e ll or offer for s al e red drum 
greater than 27 inches total length. 

(c) it is unlawful to remo\e red drum from an\ t\pe of net 
with the aid of an_\ boat hook. gaff, spear, gig. or similar de\ ice. 

(d) It is unlawful to possess red drum less than 1 8 inches total 
length. 

(e) It is unlawful to possess more than one -five red drum per 
person per da\ taken b_\ hook-and-line. hook and lin e of which 
no mor e than on e ma\ b e larger than 27 inch e s total l e ngth. 

iX) ft is unlawful to possess more than 100 pounds of red 
drum per \essel per day taken by commercial fishing equipment. 

(g) The annual commercial quota (Januar\ through 
December) for red drum js 250.000 pounds, if the quota js 
projected to be taken, the Fisheries Director shall, by 
proclamation, prohibit possession of red drum taken by 
commercial fishing equipment. 

HistoiySote: Authorit}- G.S. 113-134; 113-182; 113-221; 

143B-289.52; 

Ejf. Januaty 1 . 1991; 

.Amended Eff. March 1. 1996; October 1. 1992; September 1. 

1991; 

Temporan .Amendment Eff. October 22. 1998. 



740 



SORTH CAROLINA REGISTER 



October 15. 1998 



13:8 



RULES REVIEW COMMISSION 



1 his Section contains the agenda for the next meeting of the Rules Review Commission on ThtirsJav. October 22. 1998. 
I'): 00 a.m. , at 1307 Glemvood .Ave.. Assembly Room. Raleigh. NC. .Anyone wishing to submit written comment on any rule 
before the Commission should submit those comments to the RRC staff, the agency, and the individual Commissioners by 
Monday. October 19. 1998. M 5:00 p. m. Specific instructions and addresses may be obtained from the Rules Review 



Commission at 919-733-2721. .Anyone Mishing to address the Commission should notify' the RRC staff and the agency at least 
24 hours prior to the meeting. 



RULES REV lEW COMMISSION MEMBERS 



Appointed b\ Senate 

Teresa L. Smalluood. Vice Chairman 

Jim Funderburi<e 

Vemice B. Howard 

Philip O. Redwine 

Da\ id Twiddy 



Appointed by House 

Paul Powell. Chairman 

Anita White. 2"'^ Vice Chainnan 

Mark Garside 

Steve Rader 

George Robinson 



RULES REVIEW COMMISSION MEETING DATES 



October 22. 1998 
November 19. 1998 



December 17, 1998 
Januar\2]. 1999 



. 



MEETING DATE: SEPTEMBER 17, 1998 
LOG OF FILINGS 
RULES SUBMITTED: AUGUST 20, 1998 THROUGH SEPTEMBER 20, 1998 
AGENCY/DIVISION RULE NAME 



. 



DEPARTMENT OF COMMERCE/BANKING COMMISSION 

Name 

Petitions 

Notice 

Hearings 

Declaratory Rulings 

Request for Hearing 

Intervention of a New Part\ 

Subpoenas 

Public Inspection of Files 

Application 

National Bank conversion 

Establishment of Branches 

Discontinuance 

Conversion of Branch 

Change of Location 

Application 

Examining Committee Report 

Reports of Condition 

Publisher's Copy 

Oath of Directors 

Depository Banks 

Other Real Estate 

Suspension of Investment 



RULE CITATION 


ACTION 


4NCAC3A.0101 


Amend 


4NCAC3B.010I 


Amend 


4NCAC3B.0102 


Amend 


4NCAC3B.0103 


Amend 


4NCAC3B.0105 


Amend 


4 NCAC 3B .0203 


Amend 


4NCAC3B.0215 


Amend 


4 NCAC 3B .021 7 


Amend 


4 NCAC 3B .02 18 


Amend 


4 NCAC 3C .0101 


Amend 


4 NCAC 3C .01 11 


Amend 


4 NCAC 3C .0201 


Amend 


4 NCAC 3C .0202 


Amend 


4 NCAC 3C .0204 


Amend 


4 NCAC 3C .0301 


Amend 


4 NCAC 3C .0401 


Amend 


4 NCAC 3C .0701 


Amend 


4 NCAC 3C .0702 


Amend 


4NCAC3C .0703 


Amend 


4 NCAC 3C .0801 


Amend 


4 NCAC 3C .0802 


Amend 


4 NCAC 3C .0803 


Amend 


4 NCAC 3C .0804 


Amend 



13:8 



NORTH CAROLINA REGISTER 



October 15, 199H 



741 



RULES RE\ IE H COMMISSION 



Limitations 

Application 

Examining Committee Report 

Report of Trust Department 

Application 

Operation ofOtiier Business 

Annual Report 

Definitions 

Regional Bank Holding Company 

Bank Holding Company 

Definitions 

Definitions 

Definitions 

DHHS/MEDICAL CARE COMMISSION 

Replacement Equipment 

Applicability of Rules 

Applicabilit\ of Rules 

Cetrtificate of Need 

Certificate of Need Review Schedule 

Multi-Countv' Groupings 

Ser\ice Areas 

Reawilocations and Adjustments 

Acute Care Bed Need Determination 

Rehabilitation Bed Need Determination 

Ambulatopv Surgical Facilities 

Open Heart Surgers Services Need 

Heart-Lung B\pass Machines 

Fixed Cardiac Catheterization 

Mobile Cardiac Catheterization 

Bum intensive Care Services Need 

Positron Emission Tomograph) Scanners 

Bone Marrou Transplantation 

Solid Organ Transplantation Services 

Gamma Knife Need Determination 

Lithotripter Need Determination 

Radiation Oncology Need Determiantion 

Nursing Care Bed Need 

Demonstration Project 

Home Health Agency Office 

Dial_\sis Station Need 

Hospice Need Determination 

Hospice Inpatient Facility Bed Need 

Psychiatric Bed Need 

Chemical Dependencv Treatment 

Intermediate Care Beds 

Policies for General Acute Care 

Policies for inpatient Rehabilitation 

Policv for Ambulatory Surgical Facilities 

Polic> for Pro\ision of Hospital 

Policv for Nursing Care Beds 

Policv for Detemiination of Need 

Polic\ for Relocation 

Polic) for Home Health Services 

Policy for End-Stage Renal Disease 

Policies for Psschiatric Inpatients 

Policv fo Chemical Dependencv 

Policies for intermediate Care 



4NCAC3C .1502 


Amend 


4NCAC3D.0101 


Amend 


4NCAC3D.020I 


Amend 


4 NCAC 3D .0202 


Amend 


4NCAC3E.0101 


Amend 


4NCAC3E .0201 


Amend 


4 NCAC 3E .0302 


Amend 


4 NCAC 3F. 0201 


Amend 


4 NCAC 3 H .0002 


Amend 


4NCAC3H .0003 


Amend 


4NCAC3i.0i0i 


Amend 


4NCAC3J.010i 


Amend 


4 NCAC 3K .0101 


Amend 


10 NCAC 3R .0214 


Amend 


10 NCAC 3R .3051 


Amend 


10 NCAC 3R .6101 


Adopt 


10 NCAC 3R. 6102 


Adopt 


10 NCAC 3R .6103 


Adopt 


10 NCAC 3R. 6104 


Adopt 


10 NCAC 3 R .6105 


Adopt 


10 NCAC 3R. 6106 


Adopt 


10 NCAC 3R. 6107 


Adopt 


10 NCAC 3R. 6108 


Adopt 


10NCAC3R.6I0Q 


Adopt 


10NCAC3R.6110 


Adopt 


10NCAC3R.61il 


Adopt 


10 NCAC 3R. 61 12 


Adopt 


IONCAC3R.61i3 


Adopt 


10 NCAC 3R .6114 


Adopt 


10 NCAC 3R .61 15 


Adopt 


10NCAC3R.61I6 


Adopt 


I0NCAC3R.6117 


Adopt 


I0NCAC3R .6118 


Adopt 


10NCAC3R.6119 


Adopt 


10 NCAC 3R .6120 


Adopt 


10NCAC3R.6121 


Adopt 


10 NCAC 3R .6122 


Adopt 


10 NCAC 3R .6123 


Adopt 


10 NCAC 3R .6124 


Adopt 


10 NCAC 3R .6125 


Adopt 


10 NCAC 3R .6126 


Adopt 


10NCAC3R.6127 


Adopt 


10 NCAC 3R .6128 


Adopt 


10 NCAC 3R .6129 


Adopt 


10 NCAC 3R .6130 


Adopt 


10 NCAC 3R .6131 


Adopt 


10 NCAC 3R .6132 


Adopt 


10NCAC3R.6133 


Adopt 


10 NCAC 3R .6134 


Adopt 


10NCAC3R.6135 


Adopt 


10 NCAC 3R .6136 


Adopt 


10NCAC3R.6137 


Adopt 


10 NCAC 3R .6138 


Adopt 


I0NCAC3R.6139 


Adopt 


10 NCAC 3R .6140 


Adopt 


10 NCAC 3R .6141 


Adopt 



742 



NORTH CAROLINA REGISTER 



October 15, 1998 



13:8 



RULES REVIEW COMMISSION 



DHHS/SOCIAL SERVICES COMMISSION 

Advisor) to Counties 

DHHS/DIVISION OF MEDICAL ASSISTANCE 

Home Health Services 



10NCAC24A .0508 



Adopt 



I0NCAC26B.0103 Amend 



DHHS/SOCIAL SERVICES COMMISSION 

Tine License 

Termination of License 

Denial and Revocation of License 

Administrative Penaltx 

Nature and Purpose of State Adult Day Care 



10NCAC42C .3401 Amend 

10NCAC42C .3403 Amend 

10NCAC42C.3404 Amend 

10NCAC42C.360I Amend 

10NCAC42R.020I Amend 



DHHS/SECRETARV OF DHHS 

Two-Parent Families 

JUSTICE/CRIMINAL JUSTICE EDUCATION & TRAINING STANDARDS 

Location 

Definitions 

Minimum Standards 

Basic Trianing-LEO 

Criminal Justice Instructor Training 

Radar Instructor Training 

Radar Instructor Training 

Criminal Justice TD/SMI Instructor 

Criminal Justice TD/SMI Instructor 

Certification Training 

Certification Training 

Certification Training 

Certification Training 

Certification Training 

Certification Training 

Supplemental Training 

Re-Certification Training 

Re-Certification Training 

Re-Certification Course 

Re-Certification Course 

Re-Certification Course 

Specialized Instructor Training 

Specialized Instructor Training 

Specialized Instructor Training 

Specialized Instructor Training 

Certification of Instructors 

Radar and TD Speed Measurement 

Terms and Conditions 

Certified Instructors 

Trainee Attendance 

Comprehensive Written Exam 

Satisfaction of Minimum Training 

Comprehensive Written Exam 

Satisfaction of Minimum Training 

Levels of Approval 

Instrument Operators Certification 

Approved Speed-Measuring Instruments 

Minimum Training Specifications 

In-Service Firearms 

Filing and Fees 



10NCAC49B.03I5 



Adopt 



COMMISSION 






I2NCAC9A 


.0101 


Amend 


12NCAC9A 


.0103 


Amend 


I2NCAC9B 


.0101 


Amend 


12NCAC9B 


.0205 


Amend 


I2NCAC9B 


.0209 


Amend 


12NCAC9B 


.0210 


Amend 


I2NCAC9B 


.0210 


Amend 


12NCAC9B 


.0211 


Amend 


I2NCAC9B 


.0211 


Amend 


I2NCAC9B 


.0212 


Amend 


12NCAC9B 


.0212 


Amend 


I2NCAC9B 


.0213 


Amend 


I2NCAC9B 


.0213 


Amend 


12NCAC9B 


.0214 


Amend 


I2NCAC9B 


.0214 


Amend 


12NCAC9B 


.0215 


Amend 


12NCAC9B 


.0218 


Amend 


I2NCAC9B 


.0219 


Amend 


I2NCAC9B 


.0220 


Amend 


I2NCAC9B 


.0221 


Amend 


I2NCAC9B 


.0222 


Amend 


I2NCAC9B 


.0226 


Amend 


I2NCAC9B 


.0227 


Amend 


I2NCAC9B 


.0232 


Amend 


I2NCAC9B 


.0233 


Amend 


I2NCAC9B 


.0301 


Amend 


12NCAC9B 


.0309 


Amend 


12NCAC9B 


.0310 


Amend 


12NCAC9B 


.0311 


Amend 


12NCAC9B 


.0404 


Amend 


I2NCAC9B 


.0408 


Amend 


I2NCAC9B 


.0409 


Amend 


12NCAC9B 


.0414 


Amend 


12NCAC9B 


.0416 


Amend 


12NCAC9B 


.0603 


Amend 


12NCAC9C 


.0308 


Amend 


I2NCAC9C 


.0601 


Amend 


I2NCAC9E 


.0105 


Amend 


I2NCAC9E 


.0106 


Amend 


12NCAC9F 


0107 


Amend 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



743 



RILES REVIEW COM MISS I OS 



DENR/SOIL AND WATER CONSERVATION COMMISSION 

Cost Share 

DENRAVILDLIFE RESOURCES COMMISSION 

General Provisions 

DENR/COMMISSION FOR HEALTH SERVICES 

General 

Eligible Migrants 
Authorization 

DENR/COMMISSION FOR HEALTH SER\ ICES 

Definitions 

Sew age S\ stems 

Design Details 

Di\ ing Equipment 

Circulation S_\stem 

Decks 

Dressing & Sanitan. Facilities 

Fences 

Safety Pro\ isions 

Wading Pools 

Spas and Hot Tubs 

Water Oualit> Standards 

Maintenance and Operation 

Suction Hazard Reduction 

Water Recreation Attractions 

Definitions 

Appro\al of Construction Plans 

Inspections and Reports 

Food Supplies 

Food Ser\ ice 

Specitlcations for Kitchens 

Manual Cleaning 

Mechanical Cleaning 

Water SuppK 

Toilets 

Diapering and Diaper Changing 

Storage 

Furniture and Ton s 

Personnel 

Floors 

Walls and Ceilings 

Communicable Diseases 

Handwashing 

Wastewater 

Solid Wastes 

Animal and Vemiin Control 

Outdoor Areas 

Sw imming and Wading Pools 

Compliance 

DENR/COMMISSION FOR HEALTH SERVICES 

General 

Definitions 

Authorizations 

Reimbursement 

Reimbursement 



5NCAC6E.0105 Amend 



5NCAC 1 OF .0301 Amend 



5NCAC 16A.010I Amend 
5NCAC 16A .0106 Amend 
5NCAC 16A.0108 Repeal 



5NCAC 18A 


.2508 


Amend 


5NCAC ISA 


.2513 


Amend 


5NCAC 18A 


.2515 


.Amend 


5NCAC 18A 


.2517 


.Amend 


5NCAC 18A 


.25 1 8 


Amend 


5NCAC 18A 


.2522 


Amend 


5NCAC 18A 


.2526 


Amend 


5NCAC 18A 


.2528 


Amend 


5NCAC 18A 


.2530 


Amend 


5NCAC 18A 


.253 1 


Amend 


5NCAC 18A 


.2532 


Amend 


5NCAC 18A 


.2535 


Amend 


5NCAC 18A 


.2537 


Amend 


5ANCAC 18A.2539 


Amend 


5ANCAC 18A.2543 


Adopt 


5NCAC 18A 


.2801 


Amend 


5 NCAC 1 8A 


.2802 


Amend 


5NCAC 18A 


.2803 


Amend 


5 NCAC 18A 


.2804 


Amend 


5 NCAC 1 8A 


.2808 


Amend 


5 NCAC 18A 


.2810 


Amend 


5 NCAC ISA 


.2812 


Amend 


5 NCAC ISA 


.2813 


Amend 


5 NCAC 18A 


.2815 


Amend 


5 NCAC 1 8A 


.2817 


Amend 


5 NCAC 1 8A 


.2819 


Amend 


5 NCAC 18A 


.2820 


Amend 


5 NCAC 18A 


.2822 


Amend 


5 NCAC 1 8A 


.2823 


Amend 


5 NCAC 1 8A 


.2824 


Amend 


5 NCAC 18A 


.2825 


Amend 


5 NCAC 1 8A 


.2827 


.Amend 


5 NCAC 18A 


.2828 


Amend 


5 NCAC ISA 


.2829 


Amend 


5 NCAC ISA 


.2830 


Amend 


5 NCAC ISA 


.2831 


Amend 


5 NCAC ISA 


.2832 


Amend 


5 NCAC 1 SA 


.2833 


Amend 


5 NCAC ISA 


.2834 


Amend 


5 NCAC 24A 


0101 


.Amend 


5 NCAC 24A 


0102 


Amend 


5 NCAC 24A 


0302 


Amend 


5 NCAC 24A 


0402 


Amend 


5 NCAC 24A 


0403 


Amend 



744 



NORTH CAROLISA REGISTER 



October 15, 1998 



13:8 



RULES REVIEW COMMISSION 



Reimbursement 



15NCAC24A .0404 Amend 



STATE BOARDS/NC MEDICAL BOARD 

Annual Registration 



21 NCAC32F.0003 



Adopt 



RULES REVIEW COMMISSION 

September 17, 1998 
MINUTES 



The Rules Review Commission met on September 17. 1998. in the Assembly Room of the Methodist Building. 1307 Glenwood 
Avenue. Raleigh. North Carolina. Commissioners in attendance were Chaimian Paul Powell. Teresa L. SmalKvood. Stephen P. Rader, 
George S. Robinson, David R. Twiddy. Vernice B. Howard. Jim R. Funderburk. Anita A. White, and Mark P. Garside. 

Staff members present v\ere: Joseph J. DeLuca. Staff Director; Bobby Bryan. Rules Review Specialist; and Sandy Webster 



The following people attended: 

Valerie Chaffm 
Bud McCarty 
Jill Burton 
Linda Culpepper 
Bill Breeze 
Emilv Lee 
Dedra Alston 
Dee Williams 
Jackie Sheppard 
Mark Sisak 
Jessica Gill 
Jennie Dorsett 



Hunton & Williams 

DENR/Hazardous Waste 

DENR/Hazardous Waste 

DENR/Hazardous Waste 

N C Medical Board/ Athletic Trainers 

Transportation 

DENR 

Cosmetic Art Examiners 

DHHS/DFS 

State Budget 

DENR/DCM 

Athletic Trainers 



APPROVAL OF MINUTES 

The meeting was called to order at 10:02 a.m. with Chairman Powell presiding. He asked for any discussion, comments, or 
corrections concerning the minutes of the August 20. 1998 meeting. There being none, the minutes were approved. 

LOG OF FILINGS 

Chairman Powell presided over the review of the log and all rules were unanimously approved with the following exceptions: 

12 NCAC 1 1 .0501 : JLISTICE/NC Alarm Sv stems Licensing Board - The Commission objected to this rule due to lack of necessity. 
There are no requirements or authorizations in .0501 and it is thus unnecessary. 

12 NCAC 1 1 .0502: JUSTICE "NC Alann Sv stems Licensing Board - The Commission objected to this rule due to lack of necessity. 
The tenn "accredited sponsor" is not used in these rules so the definition in .0502 is unnecessary. 

12 NCAC 1 1 .0504: JUSTICE 'NC Alann Systems Licensing Board - The Commission objected to this rule due to lack of statutory 
authority and ambiguity. There is no authority cited for the board to set occupational qualifications for instructors, thus there is no 
authoritv to inquire into the qualifications in .0504(a)(4) or detemiine their competency in (b)(2). It is also not clear what would 
constitute competency. In .0504(c). it is not clear what standards the full board will use in determining if a course will be sanctioned. 

12 NCAC 1 1 .0505: JUSTICE/NC Alami Systems Licensing Board - The Commission objected to this rule due to ambiguity. In 
.0505. it is not clear what standards the board will use in determining if out of state courses will be sanctioned. 

14A NCAC 7 .03 13: DEPARTMENT OF CRIME CONTROL AND PUBLIC SAFETY - The Commission objected to this rule due 
to ambiguity. It is not clear what standards the Governor's Crime Commission is to use in detennining matching fund ratios. 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



745 



RULES REIIEU COMMISSION 



15A NCAC 7H .1705; DENR Coastal Resources Commission - The Commission objected to this mledueto ambiguit>. In (c)(1)(C). 
it is not clear what standards will be used in allowing dredging for fill material to protect highwa\s or other structures of public 
interest. It is also not clear what is meant b\ "structures of public interest." This objection applies to existing language in the rule. 

15A NCAC 13B .1624: DENR Commission for Health Ser\ices - The Commission objected to this rule due to ambiguity. In 
(b)( 1 )(A). it is not clear what will make a model "acceptable to the Di\ision." in (b)( 1 )(.A)(i\ ). it is not clear what will make a "two- 
phase modeling approach" be acceptable to the Division, in (b)(4). it is not clear what standards the Dis ision w ill use in appro\ ing 
materials for separation materials. In (b|(7). it is not clear what constitutes "adequate!} specified." In (b)(7)(A). it is not clear what 
constitutes "adequate!) free of organic material." It is also not clear when a "select till" will be app"0\ed b\ the Di\ision. In 
(b)(7)(B)(i). it is not clear what standards the Di\ ision will use in approving grading plans and specitlcations. In (b)(7)(C) (i). it is 
not clear what standards the Division will use in approving engineering plans. In (b)(7)(C)(iii). it is not clear what standards the 
Division will use in approving plans, in (b)(8)(B)(i). it is not clear what standards the Division vsil! use in approv ing an alternative 
"in situ test." In (b)(S)(B)(v ). it is not clear what constitutes adequate protection from environmental degradation. In (b)(8)(CKii). 
it is not clear what standards the Division will use in approving tests. In (b)(9)(B)(ii). it is not clear what standards the Division will 
use in approving placing materials on top of the GCL. In (iii). it is not clear what standards the Division will use in approving 
removing, repairing, and replacing material. In (b)(9)(C)(i). it is not clear what standards the Division will use in approving 
geosvnthetic clav installation. In ( ii). it is not clear what standards will be used in approving the placement of materials. In (v ). it 
is not clear what standards will be used in approving retesting. In (v )(111). it is not clear what standards the Division will use in 
approving engineering plans. In (b)( 10)(C). it is not clear what standards will be used in approving retesting. In (b)( 1 1 )(B)(i). it is 
not clear what standards will be used in approving the installation of leachate collection piping. In (b)( 1 1 )(C). it is not clear what 
standards will be used in approving retesting. In (b)(12)(B)(i). it is not clear what standards the Division will use in approving 
placement of drainage lav er material. In (b)(12)(C). it is not clear what standards v\ill be used in approving retesting. in (b)( 13)(B). 
it is not clear what standards will be used in approving the installation of filter lavers. In (b)( 13)(C). it is not clear what standards 
will be used in approving retesting. This objection applies to existing language in the rule. 

19.A NCAC 2D .0816: TR.ANSPORTATION Division of Highways - The Commission objected to this rule due to lack of statutorv 
authoritv. There is no authoritv for the Department to disqi 'it\ a contractor from bidding because of the recruitment of department 
emplovees for employment as the rule does in (a)(6). 

DIRECTOR'S REPORT 

Commissioner Funderburk made a motion that the election of officers be postponed until November and reviewed again at that time 
if new Commissioners have not been appointed. Commissioner Rader seconded the motion, although he did note that elections could 
be held if the new commissioners were in place. The vote was unanimous. The meeting next month is a change from the third 
Thursdav to the fourth Thursdav. .A proposed budget is being prepared for 1 999-2000. Our lease should remain the same for at least 
next _v ear. 

COMMISSION PROCEDURES AND OTHER M.ATTERS 

The next meeting will be on October 22. 1998. 

The meeting adjourned at 10:38 a.m. 

Respectfullv submitted. 
Sandv Webster 



746 SORTH CAROLINA REGISTER October 15, 1998 13:8 



CONTESTED CASE DECISIONS 



1 his Section contains tin: full text oj some of the more significant Administrative Law Judge decisions along with an index 
to all recent contested cases decisions which are filed under North Carolina's Administrative Procedure Act. Copies of the 
decisions listed in the index and not published are available upon request for a minimal charge by contacting the Office of 
Administrative Hearings. (919) ^33-2698. Also, the Contested Case Decisions are available on the Internet at the following 
address: http://www.state.nc.iis/OAH hearings/ decision/caseindex. htm. 



OFFICE OF ADMINISTRATIVE HEARINGS 

Chief Administrative Law Judge 

JULIAN MANN, III 

Senior Administrative Law Judge 

FREDG. MORRISON JR. 

ADMIMSTRATU E LAW JUDGES 



Brenda B. Becton 
Sammie Chess Jr. 
Beecher R. Gray 
Melissa Owens 



Meg Scott Phipps 

Robert Roosevelt ReilK Jr. 

Dolores O. Smith 



AGENCY 

ALCOHOLIC BE\ ERAGE f ONTROL COMMISSIO^ 

Alcoholic Beverage Control Commission \ Kenneth .lerome 
Alcoholic Beverage Control Commission v .lesse .iacob Josner. Jr 
Alcoholic Beverage Control Commission v Trade Oil Compans. Inc 
Alcoholic Beverage Control Comm \ Partnership T/A C & .I's Shipureck 
Alcoholic Beverage Control Commission v Axis Entertainment 
Sokha lliior Ramadneh \ Alcoholic Beverage Control Commission 
Alcoholic Beverage Control Commission \ Delores Williams AInaqib 
Alcoholic Beverage Control Commission \ Axis Entertainment 
Alcoholic Beverage Control Commission v James Aubre\ Stephenson 
Alcoholic Beverage Control Commission \ Bndgette Dee Williams 
Alcoholic Beverage Control Commission \ Robert Lee. Inc 
Tarus Jackson \ Alcoholic Bexerage Control Commission 



CASE 
NLMBER 



97 ABC 

97 ABC 

98 ABC 
98 ABC 
98 ABC 
98 ABC 
98 ABC 
98 ABC 
98 ABC 
98 ABC 
98 ABC 
98 ABC 



1 205 

1438 

003.3 

0290 

0357' 

0382 

0392 

0401* 

0494 

050 1 

0518 

0768 



ALJ 



Phipps 

Phipps 

Reilly 

Morrison 

Reilly 

Smith 

Chess 

ReilK 

Chess 

Reilly 

Gray 

Smith 



DATE OF 


PI BLISHED DECISION 


DECISION 


REGISTER CITATION 


07/23/98 




06/19/98 




08/21/98 




08/19/98 




07/02/98 




06/30/98 


13 03 NCR 350 


07/30/98 




07/02/98 




09/01/98 




08/11/98 




08/11/98 




07/13/98 





BOARD OF CONTRACTORS 

Heritage Pomte Builders. Inc & Patrick Hannon \ Bd ot'Contractors 



97 LBC 0243 



Phipps 



C RIME CONTROL AND PI BLIC SAFETY 

Loretta Battle \ Crime Victims Compensation Commission 97 CPS 0654 Gray 

C\nthia Austin \ Crime Victims Compensation Commission 97 CPS 1499 ReilK 

Marcella Skaggs v Crime Victims Compensation Commission 98 CPS 0065 Owens 

Talmadge E McHenr\ \ Crime Victims Compensation Commission 98 CPS 01 16 Gray 

1-inda Caldwell Wiggins v Crime Victims Compensation Commission 98 CPS 0153 Chess 

Kenneth? L\lle v Crime Victims Compensation Commission 98 CPS 0176 Reilly 

Shirley Henr> hand \ Crime Victims Compensation Commission 98 CPS 0263 Morrison 

Brenda Jean Thomas v Crime Victims Compensation Commission 98 CPS 0314 Morrison 

lareylon E Johnson v Crime Victims Compensation Commission 98 CPS 0327 ReilK 

Mia Thompson-Clark v Crime Victims Compensation Commission 98 CPS 0349 Chess 

FayeE Powell v Crime Victims Compensation Commission 98 CPS 0808 Owens 

Shirley P Chen \ Crime Victims Compensation Commission 98 CPS 1015 Phipps 

ENMRONMENT AND NATl RAL RESOl R( ES 

Ladane Williamson and Odell Decarol Williamsons DENR 96EHR1926 Gray 

Teresa Hellin \ Department of Environment and Natural Resources 97 EHR 0409 Morrison 

Ronald Prater v Department of Environment and Natural Resources 97 EHR 0451 Reilly 



08/17/98 



08/10/98 
08/12/98 
06/05/98 
06/24/98 
08/27/98 
07/06/98 
08/11/98 
08/11/98 
09/02/98 
05/14/98 
08/28/98 
09/17/98 



09/01/98 
07/29/98 
07/02/98 



13:05 NCR 533 



13:07 NCR 609 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



747 



CONTESTED CASE DECISIONS 



\GE\C\ 

James F Smith \ Depanmcnt ortn\ironmi:nl and Natural Resources 
Hickori Alliance \ Deparlinent of hn\ ironment and Natural Resources 

and 
Godfre\ Lumber Compan\. Inc 
John M Silvia v Department of Environment and Natural Resources 
Godfres Lumber Companv, Inc v Dept /tnvironment & Natural Resources 

and 
Hickorv Alliance 
Gregors B Jackson, Brenda R Jackson \ Greene Cu HIth Dept . ENR 
Robert G Goff. Sr \ Department of Ln\ ironment and Natural Resources 
Scotland Water. Cedar Circle v Enxironment and Natural Resources 
Eric Glenn Harrison \ Environment and Natural Resources 
Robert G GotV. Sr v Department of fn\ ironment and Natural Resources 

Division of Emironmenliil ManagemeiU 

Save Our Ri\crs Inc . el al \ Town of Highlands. i^HNR. Ln\ Mgmt . 

William W Cobev. Jr . Secretap. 
US Dept of the Interior Nat'l ParkS\ce \ Ln\ironmental .Mgmt Comm 



CASE 




DATE OF 


M MBKR 


ALJ 


DECISION 


97EHR I3b5 


Chess 


07/17/98 


97EHR 1607 


Reilly 


07/17/98 


97EHR 1646 


Chess 


06/03/98 


97EHR 1676 


ReilK 


07/17/98 


9S EHR 0042 


Reillv 


07/02/98 


98 EHR 0072*= 


Gray 


06/25/98 


98 EHR 0236 


Smith 


06/09/98 


98 EHR 0.i73 


ReilK 


08/28/98 


98 EHR 0448*- 


Gray 


06/25/98 


91 EHR 0377 


Gra\ 


07/30/98 


98 EHR 0410 


Smith 


08/20/98 



PI BLISHED DECISION 
KEGIS1 ER CITATION 



13 06 NCR 578 



Division of Marine Fislwries 

Lad\ LaShanda MeUiii Br\anl \ EHNR Dnision of Marine Fisheries 97 EHR 1459 



Grav 



07/20/98 



Division of Solid ii (isle Management 

Ste\e .Mdridge. et al \ DLNR. DiMsion of Solid Waste Management 

Division of I) ater Quality 

Raymond L Manin \ DENR, Division of Water Quality 

Worslev Oil Companies. Inc v DENR. DW'O. Groundwater Section 

Silver Bullet. Inc v DENR. Division of Water Quality 

HEALTH AND HI MAN SER\ ICES 

Stanle> C- Ochulo V Of Administrative Hearings. Mr R Marcus 1 odge 

Oliver C Johnson. Haze. Johnsons Health and Human Services 

Louise Streater \ Health and Human Serv ices 

Richard E Lawrence. Rebecca A Lawrence \ Health and Human Senices 

John David Brinson \ Department of Human Resources 

Stephanie Wade v Department of Health and Human Services 

CaroKn L Freeman \ Department of Human Resources 

Otis L Mack. Jr \ OlTice of .Administrative Hearings 

Christopher Germano. Lee Germano v Department of Health 

Division of Child Development 

Dulatown Presbvlerian Children's Ctr \ DHHS. Child Development 

Cassandra Mvers \ Division of Child Development 

Dora's Child Development Center v Mecklenburg Ct> DSS. and DHR 

Division of Facility Services 

Pearlie W Lawson v DHHS. Facility Svcs . Health Care Personnel Reg 
Annie K Morgan v Health & Human Services . Facility Services 
Mooresville Hospital Mgmt .Associates. Inc d/b/a Lake Nonnan Regional 

Medical Center v DHR. Facility Services. Certificate of Need Section 
and 

.Autumn Corporation and McRinlev V Jurnev 
Warren Moore & Catherine Moore v DHR. Div of Facility Services 
Constellation Health Services. Inc and Constellation Senior Services. 

Inc \ DHR. Facilitv Services. Group Care licensure Section 
and 

Diversified Health Group. L L C and The Innovative Health Cjroup. Inc 
Dialysis Care of NC. LLC. d/b/a Dialysis Care of Rowan Countv 

V DHR. Division of Facility Services. Certificate ofNeed Section 

V Biomedical Applications of NC. Inc d/b/a BMA of Kannapolis d/b/a 
Metrolina Kidney Center of Kannapolis (Lessee) and Metrolina Nephrology 
Associates. P.A (Lessor) 

Robin Annerte Reavis v Health and Human Svcs . Div of Facility Svcs 

Jennifer Blofeld v DHHS. Facility Svcs , Health Care Personnel Registrv 

Sunlite Retirement Home. Winnie Jane Johnson v DHR. Facility Services 

Helen Shokoti v Health and Human Sen ices. Div of Facility Services 

Ann Dav IS Rest Home v Group Care Licensure Section 

Diane Lingard v DHR. Facility Svcs. Health Care Personnel Reg 

Kimherlv .Annette Smith Hull v DHHS. Division of Facility Services 

Deborah .Ann Holt v DHHS. Division of Facility Services 

Tern Michelle Tvler v Health & Human Svcs. Div of Facility Services 

Dons Jones Holmes v DHHS. Facilitv Svcs. Health Care Personnel Reg 

Annie K Morsan v Health & Human Services . Facilitv Services 



98 EHR 0665 


Chess 


09/09/98 


98 EHR 0590 


Grav 


09/21/98 


98 EHR 0735 


Chess 


08/24/98 


98 EHR 0931 


Chess 


08/20/98 


98 DHR 002 1 


Reillv 


06/24/98 


98 DHR O090 


Grav 


07/08/98 


98 DHR 0196 


tirav 


06/03/98 


98 DHR 0209 


Phipps 


07/15/98 


98 DHR 0369 


Owens 


08/17/98 


98 DHR 0666 


Reillv 


08/19/98 


98 DHR 0721 


Grav 


08/05/98 


98 DHR 0729 


Phipps 


09/09/98 


98 DHR 0780 


Owens 


07/28/98 


98 DHR 0654 


Grav 


08/06/98 


98 DHR 0948 


Owens 


09/03/98 


98 DHR 1 1 84 


Phipps 


09/25/98 


97 DHR 1034 


Becton 


07/30/98 


97 DHR 1046*' 


Phipps 


07;23/98 


97 DHR 1209 


Reillv 


06/23/98 



1 3 07 NCR 617 



97 DHR 12^9 
97 DHR 1529 



97 DHR 1588 



Mann 
Grav 



Phipps 



09/08/98 
06/24/98 



08/31/98 



97 DHR 1672 


Reillv 


08/12/98 


98 DHR 0096 


tirav 


08/21/98 


98 DHR 0124 


Phipps 


06/11/98 


98 DHR 01 73 


Chess 


08/26/98 


98 DHR 0197 


Phipps 


06/23/98 


98 DHR 0214 


Becton 


(J6/22/98 


98 DHR 0239 


Phipps 


06/23/98 


98 DHR 0348 


Phipps 


06/22/98 


98 DHR 0458 


Grav 


08/21/98 


98 DHR 0463 


Grav 


08/21/98 


98 DHR 0496*' 


Phipps 


07/23/98 



748 



NORTH CAROLINA REGISTER 



October 15, 1998 



13:8 



CONTESTED CASE DECISIONS 



AGENCY 

Johnnie E V\illiams\ DHHS. Division of Facilit\ Services 

Traces Deirde Galloua\ \ DHHS. Facilin S\cs . Health Care Per Reg 



CASE 




DATE OF 


MMBER 


AIJ 


DECISION 


98 DHR 0639 


ReilK 


07/02/98 


98 DHR 0824 


Grav 


09/24/98 



PI BUSHED DECISION 
REGISTER CITATION 



Division of Medical Assistance 

Cliarlotte-Mecklenbiirg Hospital Authont\, d/b/aCarolinas Medical Ctr. 
and HaiT\ Mahannah. M D v DHHS. Division of Medical Assistance 



97 DHR 062 1 



Smith 



07/08/98 



Division ofSociai Services 

William & Cr\stal Steakle\ v DHHS. Di\ ision of Social Services 

Raji Abdus-Salaam \ Department of Human Resources. DSS-DCA 

Child Support Enfoicement Section 
Domian E Drake \ Department of Human Resources 
Robert Alan Da\is \ Department of Human Resources 
Michael W V\hitev Depanment of Human Resources 
Tro\ R Emmons. Jr \ Department of Human Resources 
Man in A Pike v Department of Human Resources 
Mar\ Putnam .Axepi \ DSS. Durham Count\ Child Support Enforcement 
Dale W Hutchinson X Department of Human Resources 
.letTen. Lee Graves v Department of Human Resources 
Donald L Carr. Jr \ Depanment of Human Resources 
Marvin Diggs \ Department of Human Resources 
Michael Patrick D\me v Department of Health & Human Sen ices 
Dennis Lee McNeill \ Department of Human Resources 
B\ron O Ashh> II \ Department of Human Resources 
Hubert L Morrison \ Depanment of Human Resources 
Roben Alan Davis v Depanment of Human Resources 
Danvl C. Thompson \ Depanment of Health & Human Sen ices 
Darnl C Thompson v Depanment of Health & Human Sen ices 
Michael Anthon\ Hill \ Depanment of Human Resources 
Michael A Wilder \ Depanment of Human Resources 
Bill\ Anthon\ Jr \ Department of Human Resources 
.Alton D Bagles \ Department of Human Resources 
Bemel B Berrv Jr \ Department of Human Resources 
Darnl Simpkins v Department of Health & Human Sen ices 
.Anthony Montgomers \ Department of Human Resources 
Tern Letterman \ Department of Human Resources 
William E Mines V Depanment of Human Resources 
.Annette Chipman \ Depanment of Human Resources 
Paul J Moble>-Jr\ Depanment of Human Resources 
Robert A Shererx Department of Human Resources 
Gregor. Andre Brown \ Department of Health & Human Sen ices 
Rodger Hazen II \ Depanment of Human Resources 
Wade .A Burgess \ Department of Human Resources 
Robert L Robinson \ Depanment of Human Resources 
Jamie A Hi -it v. Department of Health & Human Senices 
Renardo Jc. . ins v Department of Human Resources 
Anthonx Love v Department of Human Resources 
Steven Kent Gold v Department of Human Resources 
Leros J Poole \ Department of Human Resources 
HovalA McLean v Department of Health & Human Senices 
Michael Bernard Hill \ Depanment of Health & Human Senices 
Charlie RatlilTJr v Department of Health & Human Senices 
John B Hall V Department of Human Resources 
Demck A Brinton \ Department of Human Resources 
Tabatha D Pate v Department of Human Resources 
.Amanda F Blount \ Department of Human Resources 
Gregory Carty (IV #1564206) \ Department of Human Resources 
Gregor> Cany (IV #1.S64I66) v Department of Human Resources 
John L Bullard \ Department of Human Resources 
Charlie Gray HuntJr v Depanment of Human Resources 
Willie R Cruse \ Depanment of Health & Human Sen ices 
Thomas H Lotze. Jr \ Depanment of Health & Human Senices 
Robert L Williams v Department of Human Resources 
Patrick Bass v Depanment of Health & Human Senices 
Timothy Kinney \ Department of Health &. Human Senices 
Teresa L Galloway v Department of Health & Human Sen'ices 
Michael .\ Looper v Depanment of Health & Human Senices 
Kenneth E Strickland v Department of Health & Human Senices 
Ho\t H Bunt Jr \ Department of Health & Human Sen ices 
\'emon Reginald Pmkney \ Depanment of Health & Human Senices 
Elijah G Deans \ Department of Health & Human Sen ices 
James Houard Alexander \ Depanment of Health & Human Senices 
Lee J Coggins V Depanment of Human Resources 



98 DHR 0076 
98 DHR 0771 



96CRA 
96CRA 
96CRA 
96 CRA 
96CRA 
96 CRA 
96 CRA 
98 CRA 
98 CRA 
98 CRA 
98 CRA 
96CSE 
96CSE 
96CSE 
96CSE 
96CSE 
96CSE 
96CSE 
97CSE 
97CSE 
97CSE 
97CSE 
97CSE 
97CSE 
97CSE 
97CSE 
97CSE 
97CSE 
97CSE 
97CSE 
97CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 
98CSE 



1717 

1781*" 

1784 

1798 

1814 

1849 

1981 

0137 

054.5 

0588 

0787 

1305 

1435 

1649 

1780*" 

1854*" 

1902*" 

2028 

1301 

1 393 

1424 

1435 

1436 

1442 

1492 

1527 

1 545 

1568 

1605 

1656 

1666 

0071 

0130 

0307 

0310 

0312 

0333 

0375 

0420 

0421 

0449 

0506 

0555 

0556 

0560 

056l»" 

0562*" 

0569 

0607 

0653 

0658 

0682 

0689 

0728 

0769 

0783 

0817 

0818 

0833 

0867 

0869 

0894 



Gray 
Ouens 



Smith 

Phipps 

Gra\ 

ReilK 

Chess 

Momson 

Mann 

Becton 

Reillv 

Reilh 

Gray 

Gray 

Mann 

Reilly 

Phipps 

Chess 

Chess 

Mann 

Chess 

Reilly 

Chess 

Smith 

Chess 

Phipps 

Smith 

Mann 

Phipps 

Phipps 

Mann 

Gray 

Chess 

Momson 

Reilly 

Momson 

Smith 

Phipps 

Momson 

Reilly 

Smith 

Becton 

Mann 

Chess 

Smith 

Becton 

Chess 

Phipps 

Phipps 

Momson 

Smith 

Mann 

Phipps 

Smith 

Ov\ens 

Smith 

Becton 

Chess 

Mann 

Momson 

Owens 

Phipps 

Reilly 

Smith 



07/20/98 
07/30/98 



08/25/98 
08/20/98 
09/25/98 
08/25/98 
09/24/98 
09/01/98 
08/26/98 
06/23/98 
06/08/98 
06/24/98 
09/17/98 
06/22/98 
07/15/98 
08/12/98 
08/20/98 
09/01/98 
09/01/98 
08/26/98 
07/17/98 
06/24/98 
06/02/98 
06/12/98 
08/11/98 
06/17/98 
06/22/98 
09/08/98 
07/23/98 
06/17/98 
07/1-5/98 
08/27/98 
07/17/98 
06/12/98 
07/15/98 
07/06/98 
06/23/98 
06/23/98 
07/01/98 
07/02/98 
07/29/98 
07/15/98 
07/15/98 
07/20/98 
08/07/98 
06/23/98 
07/29/98 
09/23/98 
09/23/98 
08/06/98 
06/22/98 
08/26/98 
08/31/98 
06/22/98 
09/18/98 
09/17/98 
07/30/98 
09/08/98 
09/08/98 
09/15/98 
07/29/98 
07/20/98 
08/06/98 
08/20/98 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



749 



CONTESTED CASE DECISIONS 



AGENO 

Mark J Hoiilbrook \ Depanmeni ot' Health & Human Sen Ices 
Henp. A Hamel. Jr \ Departmem of Heallh & Human Senices 
Deniira Jeffries \ Depanment of Healih & Human Sen ices 
Vickie E Lane \ Michael L Adams. Department of Human Resources 
Rachel D- Farmer \ Depanment of 1 lealih & Human Sen ices 
Janice Scott Padgett (Fisher) \ Department of Human Resources 
Barbara Fanta-Blandine \ Depanment ol Human Resources 
Sharon Brim x Depanment of Health & Human Sen ices 
Tenia M Sharpe \ Depanment of Human Resources 
Ruth McFadden \ Depanment of Human Resources 

Division of U omen's nntl Cliililren's Ht'olllt 

Khamis A Sirhan \ DHHS. Women's Children's Health. Nutrition Svcs 

Joseph A Nauas \ DHHS. Women's Children's Health. Nutrition S\cs 

Jl STICE 

James Todd Tippet \ NC Compan> Police Program 

Alarm Systems Licensing Board 

Claude Da\id Huggins \ .-Xlarm S\ stems Licensing Board 

Auctioneer Licensing Ronrcl 

WilevR T\ndall\ .Auctioneer Licensing Board 

Education and Training Standards Division 

Thomas D«a\ne Brown \ Sheriffs' Fducation & Training Si....jards Comm 
Kenneth Joseph Jackson \ Sheriffs' Education & Training Standards Comm 
Odis Fitzgerald Darden \ ShentTs' Education & Training Standards Comm 
Hosle Kenneth Wise. Jr \ ShentTs' Education &. Training Standards Comm 
Hearl CKendine \ Criminal Justice Education & Training Stds Comm 
James Farrell Roberts \ Cnminal Justice Education & Training Stds Comm 
Phillip F "ith McPherson \ ShentTs' Education & Training Standards Comm 
Dar\ILa. rBrNantx ShentTs' Education & Training Standards Comm 
Harold F Esters \ ShentTs' Education & Training Standards Comm 
William Scott Ke\ \ ShentTs' Education & Training Standards Comm 
Amado Martinez \ Criminal Justice Education & Training Stds Comm 
Johnn\ VVasne Wills \ Criminal Justice Education & Training Stds Comm 
James E Ellerbe \ ShentTs' Education & Training Standards Comm 
Paul Han e> Ta> lor \ DOJ. Cnminal Justice Ed & Training Stds Comm 
Kenneth Joseph Jackson \ ShentTs' Education & Training Standards Comm 
Robert R\an Hardison \ ShentTs' Education & Training Standards Comm 
Traces Jerome Clark \ Shenffs' Education & Training Standards Comm 
Ke\ in Lamar Dorse\ \ ShentTs' Education & Training Standards Comm 

Private Protective Services Board 

Claims \'enllcation. Inc \ Pri\ate Protectne Sen ices Board 
Walter R Shirer \ Pri\ ate Protectne Sen ices Board 
Staces L Williams \ Pn\ ate Protective Sen ices Board 
Eugene Norman Garrett \ Prnate Protectne Sen ices Board 
Dann\ Charles Garrett \ Prnate Protects e Sen ices Board 
.Alfred D Malson \ Pn\ ate Protective Sen ices Board 
Melvin Eugene Davis \ Prixate Protectne Sen ices Board 

BOARD OF MEDIC AL EXAMINERS 

Joe D Crawford. M D \ Medical Bd ofNC Bd of Medical Examiners 

PI BLIC INSTRl C TION 

George & Ruth Sinclair for .Adam Sinclair \ Wake Count\ Schools 

(Special Education Sen ices I 
Nicholas Eirschele. B\ and Through! Flis Parents. Charles & Kathleen 

Eirschele \ Craven Countv Board of Education 
Gene Edward Llovd \ Department of Public Instruction 
Mrs Ph\llis ^' Moore \ Cumberland Countv Schools 
Lanev Bruce Harrill \ State Board of Education 
Joseph J Sarreno \ Department of Public Instruction 



CASE 




DATE OF 


MMBER 


\IJ 


DECISION 


98 CSE 0949 


Smith 


09/08/98 


98CSE0975 


Chess 


09/01/98 


98 CSE 1036 


Morrison 


09/15/98 


96 DCS 2105 


Gra\ 


07/08/98 


97 DCS 0251 


Phipps 


08/31/98 


97 DCS 1219 


Smith 


07/29/98 


97 DCS I486 


Morrison 


06/22/98 


97 DCS 1574 


Gra> 


08/04/98 


98 DCS 0468 


Morrison 


06/09/98 


98 DCS 0675 


Rcilly 


07/15/98 


98DHR02I9 


ReilK 


08/11/98 


98 DHR 0637 


Phipps 


07/02/98 


97 DOJ 1368 


Phipps 


09/10/98 


98 DOJ 0871 


Momson 


07/09/98 


97 DOJ 1 236 


Phipps 


07/24/98 


97 DOJ 1319 


Phipps 


07/29/98 


97 DOJ 1 578** 


Gra\ 


08/20/98 


97 DOJ 1 698 


ReilK 


06/12/98 


98 DOJ 0022 


Smith 


07/14/98 


98 DOJ 0121 


Smith 


06/22/98 


98 DOJ 0147 


Smith 


07/16/98 


98 DOJ 0388 


Reilh 


07/24/98 


98 DOJ 0430 


( rra> 


07/21/98 


98 DOJ 043 1 


Gra\ 


08/21/98 


98 DOJ 0432 


Becton 


06/08/98 


98 DOJ 0526 


Momson 


09/09/98 


98 DOJ 0574 


Chess 


07/30/98 


98 DOJ 0600 


Momson 


08/07/98 


98 DOJ 0841 


Phipps 


09/16/98 


98 DOJ 0847*' 


Gra\ 


08/20/98 


98 DOJ 0878 


Phipps 


09,'08/98 


98 DOJ 0879 


Owens 


08/31/98 


98 DOJ 0930 


Phipps 


09/22/98 


98 DOJ 0848 


Smith 


08/04/98 


98 DOJ 0937 


.Nlom^on 


09/17/98 


98 DOJ 0938 


Momson 


08/18.''98 


98 DOJ 0939 


Momson 


08/18/98 


98 DOJ 1081 


Momson 


09/17/98 


98 DOJ 1141 


Momson 


09/29/98 


98 DOJ 1 1 45 


Momson 


09/22/98 


98 BME 0870 


Owens 


07/30/98 


97EDC 1233 


Phipps 


08/11 '98 


97EDC 1234 


Phipps 


07/16/98 


98EDC0110 


ReilK 


09/10/98 


98 EDC 0305 


Gra> 


08/05/98 


98 EDC 0350 


Smith 


09/17/98 


98 EDC 0459 


Owens 


08/10/98 



PI BLISHED DECISION 
REGISTER CITATION 



' 



STATE PERSONNEI 



Department of Correction 

Tern T Rees \ Depanment of Conection 

Mohammad H Baloch. M D \ Department of Correction 

Leon Owens \ Depanment of Conection 

Tern T Rees v. Department of Correction 

Michael .A Smith v Depanment of Conection 



97 0SPI67I*" 


Smith 


06/30/98 


98OSP00I4 


Gra\ 


09/01/98 


98 OSP 0050 


Becton 


07/10/98 


98OSP0ll9»" 


Smith 


06/30/98 


98 OSP 0231*' 


Reillv 


08/11/98 



< 



750 



NORTH CAROLINA REGISTER 



October 15. 1998 



13:8 



CONTESTED CASE DECISIONS 



AGENCY 

Michael A Smith v Departmenl of Correction 

Ja\ncD Bledsoe \ Correction. Di\ of Adult Probation & Parole 

Carl \\ Cra\en. II \ Pender Correctional Institution 

Dennis S Harrell \ Dept of Correction, Caledonia Correctional Institute 

Tomm\ L Hancock v Departmenl of Correction 

Bertha Darden \ Ra>mond Smith & Dept. of Correction. Central Prison 

Crime Control and Public Safely 

Roger D Da\is \ Crime Control & Public Safet\. St Hu> Patrol 
.Albert R Little \ Crime Control & Public Safet>. Info S\s Specialists 
Thomas E Carlton v Crime Control & Public Safet\. St Hu> Patrol 

Employment Security- Commission 

lane B Bolin and .\rlene G Sellers \ Emplovment Securm Commission 
Jane B Bolin and .Arlene G Sellers \ Emplo\ment Security Commission 

Environment and Satural Resources 

Charles .\nthon\ Bruce \ ENR. Di\ ision of Parks and Recreation 

Health and Human Services 

.Annette Honea \ Department of Human Resources 

.Angela M Miles v Cumberland Count) Department of Social SerMces 

Shung Fung-Chin \ Department of Human Resources. Caswell Center 

Charm Suick \ Cumberland Count\ Department of Social SerMces 

Yolandra Best and Ro\ Hudson \ DHHS. John Umstead Hospital 

^'olandra Best and Ro\ Hudson \ DHHS. John Umstead Hospital 

Fred Foster. Jr \ Department of Health and Human Senices 

Shung Fung-Chin \ Department of Human Resources. Casuell Center 

Ruth Holrosd \ Montgomep. Ct\ DSS. Children's Services 

Fred Foster. Jr \ Department of Health and Human Senices 

James W Crews \ DHHS. Murdoch Center 

Patricia R Quick \ DHHS. Dorothea Di\ Hospital 

Angela M Miles \ Cumberland Counl\ Department of Social SerMces 

Delores Laveme Rich \ Health & Human Services. Dorothea Di\ Hosp 

Fred Foster. Jr \ Department of Health and Human Services 

Da\ id .A Kilpatrick \ Health & Human SerA ices. Caswell Center 

Fred Foster. Jr \ Department of Health and Human Ser\ ices 

Anthons M Ruiz v Department of Health & Human Sscs. ^'outh S\cs 

Rudolph Waters \ DHHS. "louth Senices. Dobbs School 

Euwell Falconer \ Karen A An. rews. Gaston-Lincoln .Area Mental Health 

JetTres L Williams \ Dorothe' Di\ Hospital 

Barbara Jean Paquette \ Durham Counts (respondeat superior for the 

Durham Couni\ Public Library ) 
Derrick Skinner \ Health & Human Sen ices. Cherr> Hospital 

Departmenl of Justice 

Linda Maraaret Koss \ State Bureau of Investi2ation 



Department of Public Instruction 

Lillie Bumette Pearsall v Wa\ne Ct\ 
Mr Ste\e Ta\lor 



Bd of Ed . Mrs Veda McNair and 



CASE 




DATE OF 


PI BLISHEDDEf ISION 


\l MBER 


ALJ 


DEC LSION 


REGISTER CITATION 


98OSP0317*" 


Reilb 


08/11/98 




98OSP0543 


Owens 


07/29/98 




98OSP0633 


Smith 


06/25/98 




98 OSP 0846 


Mortison 


09/08/98 




98OSP08S1 


Owens 


08/04/98 




98 OSP 0905 


Smith 


09/25/98 




97 OSP OM 7 


Chess 


05/27/98 




97 OSP 1 1 57 


Mortison 


07/22/98 




98 OSP 0919 


Phipps 


09/24/98 




97 OSP ii;2'' 


Chess 


06/02/98 




97 OSP 1134*' 


Chess 


06/02/98 




98 OSP 0240 


Reilb 


06/08/98 




96 OSP 0833 


Chess 


08/24/98 




97 OSP 061 3*- 


Gra\ 


07/10/98 




97 OSP 0638*'" 


Chess 


08/13/98 




97 OSP 0775 


Gra> 


07/10/98 




97 OSP 0862*' 


Chess 


08/13/98 




97 OSP 0863*" 


Chess 


08/13/98 




97 OSP 1287*'- 


Smith 


08/20/98 




97 OSP 1530*'" 


Chess 


08/13/98 




97 OSP 1586 


Smith 


05/27/98 


13 02 NCR 257 


97 OSP 1701*'- 


Smith 


08/20/98 




98 OSP 0060 


Gray 


07/20/98 




98 OSP 0061 


Becton 


07/16/98 




98 OSP 0084*' 


Gra> 


07/10/98 




98 OSP 0120 


Gray 


07/08/98 




98OSP0I87"- 


Smith 


08/20/98 




98 OSP 0271 


Owens 


08/13/98 




98 OSP 0403*'- 


Smith 


08/20/98 




98 OSP 0454 


Gray 


06/04/98 




98 OSP 0474 


Morrison 


07/30/98 




98 OSP 0538 


Reilh 


08/06/98 




98 OSP 0595 


Becton 


07/22/98 




98 OSP 0765 


Morrison 


08/05/98 




98 OSP 1 035 


Gray 


09/21/98 




97 OSP 01 89 


Chess 


08/14/98 




98 OSP 0944 


Smith 


08/25/98 





Secretary of State 

Jonathan M Demers \ Department of Secretar\ of State 

Department of Transportation 

Johnn\ O Shi\ar\ Department of Transportation 

Larry \V Da\is\ Department of Transportation 

Shern Lynn Noles \ Department of Transportation-NCDMV 

Clarice Goodwin .Arthur \ Department of Transportation. Ferties Di\ ision 

I'niversity ofSorth Carolina 

Douglas Love. Jr \ LNC Hospitals 

Deborah J Fenner \ NC Central University 

JovceM Smith V North Carolina Central University 

Fdvvin Swam v Universitv of North Carolina at Chapel Hill 

Leo Wattbrd. Roosevelt Parris. Claiborne Baker et al v University of 

North Carolina at Chapel Hill 
Johnnv Johnson. Jr v A & T St University Student Union-Grievance Bd 
Jessie L Johnson v Bernard K Locklear UNC at Pembroke 



97 OSP 1018 


Becton 


97 OSP 1366 


ReilK 


98 OSP 0241 


Gra\ 


98 OSP 0269 


Chess 


98 OSP 0864 


Phipps 


97 OSP 0662 


ReilK 


97 OSP 0902 


Chess 


97 OSP 1297 


Smith 


97 OSP 1694 


Mortison 


98 OSP 0254 


Chess 


98 OSP 0299 


Owens 


98 OSP 0444 


Grav 



07/07/98 



09/01/98 
07/08/98 
08/11/98 
09/24/98 



06/08/98 
05/29/98 
06/25/98 
07/31/98 
07/17/98 

09/02/98 
09/29/98 



13 03 NCR 343 



Consolidated Cases. 



13:8 



NORTH CAROLINA REGISTER 



October 15, 1998 



751 



CO.XTESTED CASE DECISIOSS 



Jonathan L Fann v North Carolina State Universit\' Ph\sical Plant 
Greta M Haulhome \ Universit\ of NC at Pembroke 
Robert W Bnnson v NC State Unjversit>' 

STATE TREASIRER 

Hugh A Wells v Consolidated Judicial Retirement System of NC; 
Bd of Trustees Teachers and Slate Employees' Retirement System 



98OSP0465 


Becton 


07/17/98 






98OSP0S31 


Chess 


09/11/98 






98OSP0887 


Owens 


08/10/98 






98DST03I6 


Morrison 


06/05/98 


1301 NCR 


166 



{ 



TRANSPORTATION 

Das id Warren Dew et al 



\ Motor Vehicles. Alexander Killens Comin 



95 DOT 1144 Grav 



06/04/98 



IM\ ERSrr^ OF NORTH CAROLINA 

Patricia D Hall \ Unnersity of North Carolina at Chapel Hill 
Ladonna P James v UNC Hospitals 



98UNC0397 ReilK 
98 UNC 0591 Becton 



08/20/98 
07/20/98 



752 



NORTH CAROLINA REGISTER 



October 15, 1998 



13:8 





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